FMCG companies under pressure due to rise in crude prices after sugar, wheat

Mumbai: After higher prices of sugar and wheat, the rise in crude oil prices has become a matter of concern for the country's fast moving consumer goods (FMCG) companies. Sugar and wheat prices have settled at high levels for now while crude oil has crossed $90 per barrel. High crude oil prices do not negate the impact on the profit margins of companies.

In addition to high prices of raw materials, the uncertainty of rainfall in the current year's monsoon has affected rural demand. If crop irrigation does not fall as expected, rural demand is not ruled out.

With the monsoon now departing, farmers are hoping for a return of rain. Inflation in the country has been high since 2021, but the recent spike in crude oil prices is becoming a matter of concern, an analyst said. In August, FMCG sales saw a decline both on a monthly and yearly basis. Shopkeepers are also currently refraining from carrying more stocks.

Meanwhile, an increase in crude oil prices and an uncertain monsoon may affect the profit margins of companies, a research report said recently.