Prices of essential everyday consumer products are likely to rise further in the near term as companies continue to face inflationary pressure from key raw materials, according to a report by Systematix Research. The brokerage said companies across food, beverage, home and personal care categories have already raised product prices by about 3% to 7% on average over the last one to two months, as the cost of their raw material baskets climbed by roughly 8% to 10%.
The report warned that more price increases, along with grammage cuts, are highly likely in food and beverage (F&B) as well as home and personal care (HPC) products as companies try to offset higher input costs. “We believe further price hikes/ grammage cuts are highly likely near-term in F&B/ HPC products as companies scramble to offset the inflationary impact with a combination of pricing, mix and cost savings,” the report said.
Price hikes and grammage cuts likely
Systematix Research said pricing growth is expected to become a bigger contributor to revenue growth for consumer staple companies in the first half of FY27, with the split between pricing and volume contribution likely to stay close to 50:50. At the same time, it cautioned that rising retail inflation could weigh on consumption volumes in the coming months, even if companies manage to protect sales value through higher prices.
Margin pressure to continue
While the recent price hikes may help companies defend absolute gross profits, gross margin pressure is expected to persist in the first half of FY27, the report said. It added that this could raise concerns over the overall margin outlook for the next financial year, especially if raw material inflation remains elevated.
The report noted that the sharp rise in costs is particularly visible in categories linked to palm oil, crude and packaging. Palm oil prices rose 11%, while Brent crude surged 32% amid the ongoing West Asia conflict. Packaging costs also climbed sharply, with High-Density Polyethylene (HDPE) prices jumping 56%.
Cost shock across categories
HDPE, or high-density polyethylene, is a petroleum-derived thermoplastic used widely in consumer packaging, including shampoo bottles, detergent containers, jerry cans, bottle caps and flexible packs. The report said the increase in packaging input costs adds to pressure on companies in the F&B and HPC segments, where packaging is a major component of total cost.
According to Systematix Research, part of the raw material inflation was already visible in the March quarter, when gross margins of major companies under its coverage contracted by around 50 basis points year-on-year and around 30 basis points quarter-on-quarter in Q4 FY26. The firm said most of the impact from the current wave of cost inflation is expected to show up in the first half of FY27.
To manage profitability in a difficult cost environment, companies are expected to rely on a mix of price hikes, grammage reduction and operational efficiencies, the report said. That means consumers may not only face higher prices, but also smaller pack sizes for the same price in some categories.
The report’s outlook suggests that the next few months could be challenging for households already dealing with inflation in kitchen staples and daily-use goods. For manufacturers, the priority will be to protect margins without sharply hurting demand in a market where consumers are becoming more price-sensitive.