MUMBAI: Indian FMCG products might get costlier on account of the war in West Asia as companies use up their buffer raw material stocks and shipments of key ingredients, including crude oil and oil-derived products, slow down because of global tensions, experts said.
Persistent crude oil-linked inflation could keep companies cautious on pricing, margins and expansion plans. As inflationary pressures build, consumers are expected to cut back on discretionary spending and reduce shopping frequency.
“People will start to look at value for money often. So, some of this trading down will happen,” said Anand Ramanathan, partner, consumer industry leader, at Deloitte South Asia.
A recent report by global consumer data and market research company Worldpanel by Numerator (formerly Kantar) lists out products such as hair oil, biscuits and jams that could be under pressure due to rising inflation, as well as categories such as chips and snacking, which are dependent on oil-linked inputs and logistics.
Biscuit and candy makers will also be under scanner as major raw materials like wheat and sugar prices are on an upward trajectory. Quick service restaurant (QSR) companies may face stress from rising commercial LPG cost and falling discretionary consumption.
Brent crude oil continues to hover at $90-$100 a barrel after the closure of the strategic Strait of Hormuz through which about a fifth of the world's oil and liquefied natural gas usually passes.
According to K Ramakrishnan, MD, South Asia of Worldpanel, most macro assumptions for India’s 2026 outlook were built around crude oil prices averaging $80-85 per barrel. If prices stay at $100 a barrel for a prolonged period, it could significantly alter cost structures across logistics, packaging and fertilizer availability.
Ramakrishnan said 2026 is “shaping up to be a year of disciplined growth rather than exuberant expansion.” However, if macroeconomic headwinds ease, he expects FMCG household consumption volume growth to potentially touch 5% from 5.4% in the March quarter, led largely by household care and personal care categories.
Unsustainable growth
FMCG companies have flagged further single-digit price hikes amid continued inflationary pressure. Experts noted that companies that had good volume growth in Q4 of FY26 may not be able to sustain it this year.
“Looking ahead to FY27, sustaining volume growth will become more challenging as the sector once again faces a volatile operating environment,” said Naveen Malpani, partner and consumer & retail industry leader of consulting firm Grant Thornton Bharat.
“Q2, you'll start seeing demand falling as an effect of all these factors. FMCG typically takes time to react,” said Ramanathan of Deloitte South Asia.
Higher crude oil prices increase the cost of plastics and polymers used in packaging across FMCG categories. Oil-derived materials are embedded in products ranging from toothbrushes and shampoo bottles to cosmetics and synthetic fabrics.
Household cleaning products, both in terms of packaging and chemical ingredients, also rely heavily on petrochemicals. Even consumer electronics such as smartphones and computers contain plastic components derived from oil.
Prices have already started to go up. India’s leading dairy brands, including Amul and Mother Dairy, increased retail milk prices by ₹2 per litre from 14 May. Heritage Foods noted that average milk procurement prices rose 8% year-on-year to ₹46.67 per litre in Q4 and 7% to ₹44.72 for the full year, reflecting broad-based dairy inflation.
On 16 May, Modern Bread increased prices by ₹5 per pack on basic variants. Higher fuel costs have added further pressure, with petrol and diesel prices hiked by about ₹4 per litre in a week, after four years of stability.
Policy interventions have kicked in: India banned sugar exports on 13 May until 30 September to curb domestic price pressures. Cooking oil prices have surged 14-22% over the past year, according to industry reports.
Accelerating inflation
India’s wholesale price index inflation surged to a 42-month high of 8.3% in April, sharply up from 3.88% in March, driven by rising prices of mineral oils, crude petroleum and natural gas, according to the ministry of commerce and industry. Fuel and power inflation accelerated to 24.71% from 1.05% in March, reflecting a sharp spike in energy costs.
Retail inflation edged up to 3.48% in April from 3.40% in March, largely due to higher food prices, indicating sustained pressure on household budgets despite relatively contained headline retail inflation.
According to the May 2026 FMCG pulse report by Worldpanel published on Wednesday, FMCG value growth was 13.1% in the January-March quarter, while volume growth came in at 5.4%. Rural growth was slower than urban growth, according to the report. Urban consumption grew at 6.4% while rural was above 4%.
“Rural has shown a strong trajectory and in normal conditions we would expect it to bridge the gap with urban growth,” Ramakrishnan said. “What could hurt the rural trajectory is a combination of high inflation and low income due to the expected weak monsoon,” he said.