1. Big relief for consumers: Prices of FMCG products falling after GST rollout

Big relief for consumers: Prices of FMCG products falling after GST rollout

Prices are falling in the FMCG segment a month-and-a-half after the roll out of the GST. A host of consumer majors, including Hindustan Unilever and ITC, have reduced prices of FMCG products such as soaps, shampoo, detergents, biscuits and savoury snacks, among others.

By: and | Published: September 23, 2017 5:48 AM
gst rollout, goods and services tax, fmcg products, industry news The GST rate schedule indicates that nearly 81% of all items are in the 18% tax bracket, or below. (PTI)

Prices are falling in the FMCG segment a month-and-a-half after the roll out of the GST. A host of consumer majors, including Hindustan Unilever and ITC, have reduced prices of FMCG products such as soaps, shampoo, detergents, biscuits and savoury snacks, among others. This has resulted in a 3-8% decline in prices of goods across modern retail outlets, including Big Bazaar and Hypercity, apart from online grocery firms such as Bigbasket and Grofers.

After the implementation of the GST, hair oil, toothpaste and soaps have been put under the 18% tax slab, significantly lower than the previous 22-24% slab. The GST rate schedule indicates that nearly 81% of all items are in the 18% tax bracket, or below. “Post the roll-out of the GST, there has been a downward trend in prices of products as far as new stock is concerned. However, as we still have three-five months of old stock which belongs to the pre-GST regime, the larger impact would be seen once the old stock gets completely replaced by new items,” said Sadashiv Nayak, CEO of Big Bazaar, Future Group India.

For instance, biscuit manufacturer Unibic India has brought down prices by 10%-20% across products. Likewise, retailers claim that prices of other food products such as museli too have come down. As for FMCG products, Hindustan Unilver in Q1FY18 results said it has reduced prices of products such as detergent bars, skin cleanser, toothpastes and hair oil. For example, a Surf Excel bar, which would earlier cost Rs 29, is now being sold at Rs 27. Similarly, the company is currently selling a pack of four Lifebuoy Activ Silver at Rs 94, instead of Rs 104.

Govind Shrikhande, managing director at Shoppers Stop, said: “At Hypercity, many of the food items have zero percent tax and we have passed the benefits to customers for our private labels. Hindustan Unilever too has reduced prices on certain products and other FMCG companies too have done the same.” Moreover, lowering of prices has helped boost sales. Albinder Dhindsa, CEO of Grofers, claims that the e-grocer, prior to the GST regime, was clocking a 15% spurt in monthly sales. After the implementation of the GST, the company posted a 23% increase in sales in July.

Echoing Dhindsa, Seshu Kumar Tirumala, national head – buying and merchandising, Bigbasket, said:
“The reduction in prices of products havs helped both consumers as well as sellers. Post the drop in prices, we have seen an uptick in sales.” Industry observers contend that as manufacturers get more clarity on input tax credit, a further reduction in rates is on the cards.

Rajat Wahi, partner and head – consumer, Deloitte Touche Tohmatsu India, said: “Fast moving consumer goods companies are likely to witness their costs coming down with the implementation of GST on overall logistics, warehousing and also enjoy the benefit of input tax credit. All these are likely to improve margins of FMCG companies and demand is also expected to improve as the companies are likely to pass on the benefits partially to consumers.”

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    debendra kumar puri
    Sep 24, 2017 at 8:09 pm
    Has the price actually fallen ??? In Organised retails, what is the contribution does these modern retail outlets does to total FMCG s ? How many consumers does go to there Modern retail stores ??? So these are sugar coated representation reflecting one side of the story! Finally a Joke GST has reached number 3rd position in the list of things not understood. Duckworth Lewis at second position and Wife's mood Still continued to be on number 1 😜😜😜
    Reply
    1. C
      Cherian
      Sep 24, 2017 at 7:34 pm
      So does it mean that buying groceries through Hypermarket is cheaper than buying from roadside vendors, is it good to have chai from street vendors or from restaurants?
      Reply
      1. P
        Priya
        Sep 24, 2017 at 6:24 pm
        Save in paisa and pay in lakhs, that is called saving for our FM and PM.
        Reply
        1. M
          My Space
          Sep 24, 2017 at 4:44 pm
          Petrol price in paises on a daily basis. Whom are you fooling 15/August/2017 -₹70.53 16/August/2017 -₹70.59 17/August/2017 -₹70.70 18/August/2017 -₹70.76 19/August/2017 -₹70.83 20/August/2017 -₹70.85 21/August/2017 -₹71.01 22/August/2017 -₹71.15 23/August/2017 -₹71.22 24/August/2017 -₹71.37 25/August/2017 -₹71.51 26/August/2017 -₹71.52 27/August/2017 -₹71.56 28/August/2017 -₹71.60 29/August/2017 -₹71.62 30/August/2017 -₹71.62 31/August/2017 -₹71.66 01/September/2017 -₹71.78 02/September/2017 -₹71.95 02/September/2017 -₹72.58 03/September/2017 -₹72.08 04/September/2017 -₹72.20 05/September/2017 -₹72.25 06/September/2017 -₹72.25 07/September/2017 -₹72.34 08/September/2017 -₹72.44 09/September/2017 -₹72.58 10/September/2017 -₹72.73 11/September/2017 -₹72.87 12/September/2017 -₹72.95 13/September/2017 -₹72.95 22/September/2017 -₹74.82 Best tricks by petro ministry to help the sellers!
          Reply
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            Alok Sharma
            Sep 24, 2017 at 4:35 pm
            There is nothing happening on ground. Why the press lies all the time. The press has started pimping. We know the prices you don’t know. If you are real and report well go on to ground and see for yourself. I can’t believe it because I know there has been no downward trend in any prices
            Reply
            1. M
              M.Fameen
              Sep 24, 2017 at 2:45 pm
              When people of Singapore and Malaysia are critical of their govt uniform single digit 6 GST. We india newspaper are exclaiming a18 GST on food items.While other products are riding a wave of price rise. The people of India are really suffering. Please do not publish this type of paid news. You are doing a great injustice to people.
              Reply
              1. Mukul Singh
                Sep 24, 2017 at 2:21 pm
                The amount we r saving in consumer goods is a month is much more less than we are paying extra on one day fuel... we don't want any thing cheap... in China too things are not cheap... but all prices should be at par of world...
                Reply
                1. V
                  Vinay Dua
                  Sep 24, 2017 at 1:57 pm
                  We r bounded with words also , shame on you, i writed twice but both time my middle words disappear after posting.
                  Reply
                  1. V
                    Vinay Dua
                    Sep 24, 2017 at 1:55 pm
                    STOP SELF.
                    Reply
                    1. V
                      Vinay Dua
                      Sep 24, 2017 at 1:53 pm
                      Please stop being pupet. Money is not everything , stop self ,
                      Reply
                      1. R
                        Rajesh
                        Sep 24, 2017 at 1:47 pm
                        Those who are in the field of journalism should keep its sanc y by putting news as it is , not less, not more. When it comes to this specific article, a financial line new paper should put facts and figures , not a biased propaganda push like this.
                        Reply
                        1. R
                          Raj
                          Sep 24, 2017 at 1:00 pm
                          I have stopped reading news paper / watching news channel ... all paid news. Don’t make fun of your newspaper at least rearch what you publish. Shame on you
                          Reply
                          1. B
                            Bakwas
                            Sep 24, 2017 at 10:45 am
                            People got richer due to this drop in FMCG prices.....really appreciate the govt efforts to make us richer each day
                            Reply
                            1. RH Awesome
                              Sep 24, 2017 at 10:39 am
                              As a common, all I see is price rising, I have not seen a single thing from vegies to electronics that I use to buy come down. I really don’t understand what is going on.
                              Reply
                              1. R
                                Rajeev
                                Sep 24, 2017 at 10:17 am
                                Bakwas propaganda
                                Reply
                                1. P
                                  Pmshah
                                  Sep 24, 2017 at 9:13 am
                                  Then why have majority of Capitol goods, which generate jobs and GDP been set at 28 ? This affects a pretty large number of manufacturers that have high of value addition. It affects their cash flow even more if the billing occurs in the last week of the month. May be the government should come out with a law that requires a buyer to pay the GST part immediately regardless of the credit terms agreed upon by the vendor and buyer.
                                  Reply
                                  1. J
                                    Jaleel Mogar
                                    Sep 24, 2017 at 8:45 am
                                    Then why not GST for petrol and diesel
                                    Reply
                                    1. A
                                      Abrar Hussein
                                      Sep 24, 2017 at 8:40 am
                                      Not a well researched article.FMCG goods prices dropping by 2₹ in case of Surf Excel Bar .Who Cares???Ten thousand other articles prices have shot up.Steel,Hardware,Paints,Electrical goods,Biscuits and many more items from other sectors.Petrol prices that has direct impact on many items is trading at new Highs.
                                      Reply
                                      1. P
                                        pk
                                        Sep 24, 2017 at 6:13 pm
                                        Dear rs 2 means17 of 29.steel prices allready down .3years back we purchased petrol of rs 83/- now is rs 71/_ Three y back inflation was 10 now it below 4. Before public money used to go in bhrashtachar. Now in gareeb kalyan.
                                        Reply
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