Israel-Palestine war likely to impact on Indian households Prices of commodities wil rise
Israel-Palestine war likely to impact on Indian households
Prices of commodities wil rise
It comes as a worrying news for the Indian Households that in the midst of slow pace of recovery in rural demand and a scattered monsoon, the supply-side disruptions due to wars may further increase prices
With the war between Israel and Palestinian militant group Hamas escalating rapidly and increasing the chances of neighbours like Iran and Lebanon joining the fight, consumers in India could be staring at a difficult future. If the war between Russia and Ukraine had impacted global supply of key agri-commodities like wheat, the Israel-Palestine crisis could affect global crude oil supply, which may hit Indian households’ budgets.
Over the last week, the supply of crude oil has been impacted and prices have surged. . But with chances of Iran getting involved in the war, which would likely follow a US-led sanction on the major oil producing country, prices ofr crude oil may surge further, analysts predict.
This would by and large impact on the prices of consumer goods in countries like India that are highly dependent on fossil fuel imports.
As per Avneet Singh Marwah, CEO of Superplatronics, an NCR-based white goods maker, if the war continues for another fortnight, prices of consumer durable items like smart televisions, washing machines and other items are likely to go up in November. “Currently, most leading manufacturers have enough stock for the festive season. But if this conflict extends then cost of production would go up—leading to another round of price hikes.
Surging oil prices impact manufacturers on two fronts. While they increase the price of plastics a key material in most large electronic and home appliances they also increase logistics and supply costs. As per industry estimates, for large appliances like washing machines, the two form nearly 33 per cent of the cost of production and delivery.
Further, daily staples like fast moving consumer goods (FMCG) items may get impacted as well. FMCG makers in the country are already reeling from poor volume offtake and subdued demand from the rural households. As per analyst from Nuvama Institutional Equities, volume growth in July-September quarter will remain low, with most leading FMCG players reporting low-to-mid single digit increase as rainfall deficit in the month of August was highest in 100 years.
According to Kunal Vora, Director-Head of India Equity Research at BNP Paribas, FMCG industry revenue growth to slide again in the September quarter of FY24 as price-hike benefits continue to fade with no meaningful improvement in sales volume.
Moreover, for Indian FMCG companies like Dabur and Marico, which have a slice of their revenue coming from middle-east regione 12th ar brings bad news. Dabur, for instance, gets 25 per cent of its Rs 2,800 crore plus international business revenue from the Middle-East region—while countries like Egypt in the North Africa contribute 23 per cent.
News Edit K.V.Raman
