Inflation for FMCG segment cooling down, volume from rural markets going to improve, says ITC | The Financial Express

Inflation for FMCG segment cooling down, volume from rural markets going to improve, says ITC

“As far as consumption is concerned, the main stress point is inflation induced because prices of lots of products have gone up at a percentage probably in the prior period that would have taken five years to go up,” Puri added.

Inflation for FMCG segment cooling down, volume from rural markets going to improve, says ITC
Presently there is a "phenomenal" amount of inflation, hence FMCG volume growth in rural areas is "muted" and the bulk of the growth is inflation lead, he said in a panel discussion at an event organised by industry body CII. (Photo source: ITC Instagram)

Inflationary pressure on the FMCG segment is “cooling off a little” and volume growth from the rural markets is going to be better, ITC Chairman & Managing Director Sanjiv Puri said on Thursday. Presently there is a “phenomenal” amount of inflation, hence FMCG volume growth in rural areas is “muted” and the bulk of the growth is inflation lead, he said in a panel discussion at an event organised by industry body CII. When asked about the consumption trends, Puri said, “In the FMCG segments, we are seeing both the trends of ‘Premiumization’ and at the same time there is a lot of value-seeking behaviour and stress at the lower price points.” However, he also said that presently India is “much better” than the rest of the world, witnessing high inflation.

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“As far as consumption is concerned, the main stress point is inflation induced because prices of lots of products have gone up at a percentage probably in the prior period that would have taken five years to go up,” Puri added. However, Puri also added that rural demand is going to get better because realisations have been better and costs are up and as a net, it is “better off”.

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“There would be certain regions that are going to be more impacted and it is more to do with the distribution of rainfalls and the impact of the untimely rains. Certain areas would be under stress,” he said adding “Overall my assessment is that it is going to be better at time.” Puri also added that Inflation as far as FMCG is concerned is cooling off a little.

Besides, he also added that the macros for investment are “pretty good”.”If you look at the availability of funds, the corporate income, better balance sheets, all these are positive. Earnings also are on a better trajectory. The issue that really comes to is about capacity utilisation, which is also picking up. But there is a serious amount of global uncertainty,” he said.T here are also serious headwinds on exports and that is going to dampen sentiments, Puri added.

“For companies like ours, which are domestically focused, private CAPEX is continuing. We have already done and some more is in the pipeline,” he said. Puri also added that a lot of policy interventions such as Gati Shakti and investment in infrastructure have been done by the government and many of them are “absolutely in the right direction”.

These “will certainly help us benefit from the opportunity that arises,” he said adding though manufacturing is important, India has also to play to some other areas of strength since the demographics are a big strength for the country. There is also a need to improve the income level and the country should look into sectors such as tourism, agriculture, and food processing, which could be “economic multipliers”, he added

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First published on: 08-12-2022 at 14:35 IST