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Business News/ Industry / Retail/  ‘Rural stress is for real due to inflation’
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‘Rural stress is for real due to inflation’

ITC chairman and managing director Sanjiv Puri said consumers are increasingly showing value-seeking behavior

ITC chairman and managing director Sanjiv Puri.Premium
ITC chairman and managing director Sanjiv Puri.

NEW DELHI : Although high inflation is putting pressure on household demand for fast-moving consumer goods, especially in rural areas, inflation could be moderating, said ITC chairman and managing director Sanjiv Puri at a virtual press meet on Thursday.

“As far as rural is concerned and what is available through external data…there is some stress on demand for sure. What I think is positive is that the realizations this time are better, though the input costs have also gone up, net-net the sense is there will be some positives and it should work well. We should see its impact in the later part of the year."

Cigarette maker ITC is yet to announce its earnings for the June quarter.

While sharing his views on the industry, Puri said that consumers are increasingly showing value-seeking behaviour. “At the industry level, I will say as far as agriculture, hotels, paperboard and packaging is concerned, demand is robust. As far as FMCG is concerned, there are concerns arising out of inflation and there is more value seeking behaviour."

Out-of-home and premium categories are doing better as mobility picks up and despite commodity costs falling, inflation could still remain at elevated levels he added.

“As far as commodity pricing is concerned, at this point in time, there is some cooling off for sure, but to really predict is difficult because there are multiple factors at play. There are a bit of supply-side challenges. There is a bit coming in because of the so-called green inflation. Agri commodities are being increasingly diverted for biodiesel and so on. Energy prices still remain elevated, energy security continues to be a global concern."

This time the magnitude of inflation was so high that some price action was required, but the company is working on cost efficiencies instead of taking direct price hikes, he said. “My sense is that while there will be some moderation as the signs show, but for some time inflation will remain at elevated levels compared to what it was. In fact, we understand the stress on account of inflation and therefore raising prices is the last lever that we use. We try and manage it through cost efficiencies," he added.

Households have seen stress for buying daily essentials and FMCG volumes declined 5% in the June quarter, according to industry estimates.

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Published: 22 Jul 2022, 01:51 AM IST
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