Food items personal care products will become expensive:Companies face high raw material costs

In the coming days, essential consumer products used in daily life may become more expensive. According to a Systematix Research report, companies are under continuous inflationary pressure due to rising raw material prices, which may lead them to increase the prices of their products. Prices have already increased by 3 to 7% in the last two months The report states that companies across different categories have already increased the prices of their products by an average of 3% to 7% in just the last one to two months. The main reason for this is that the cost of companies’ raw material basket has increased by approximately 10% on average. Companies may reduce package weight along with increasing prices To compensate for this increase in input costs, companies may adopt the method of ‘grammage cut’, i.e., reducing packet weight, along with increasing prices. Palm oil, crude and packaging costs have increased According to the report, costs have increased very rapidly in some specific categories: Impact will be visible on companies’ profits and margins The impact of this raw material inflation started showing in the March quarter (Q4FY26) itself, when the gross margins of major companies declined. On an annual basis, it has decreased by 0.50%. The biggest impact of this current inflation will be visible in the first half of financial year 2027 (H1FY27). To compensate for the current cost increase, companies are raising the prices of their goods, which will help them avoid losses. However, inflation is so high that there is a possibility that companies’ overall profit margin will remain low in the year 2026-27. Earnings will increase but consumption may decline The report also warns that due to rising retail inflation, consumption volume (total consumption or sales of goods) may be adversely affected in the coming months. Knowledge Part: Gramage Cut or ‘Shrinkflation’: When companies reduce the weight of the contents in their product without changing its price, it is called ‘shrinkflation’ or gramage cut in economic terms. Companies do this so that the customer does not directly notice the price increase and the company’s profit margin is also protected.