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Consumer goods prices rising
Published on 25 Feb. 2010 12:06 AM IST
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Most consumer goods companies have announced price hikes across categories like food products, soft drinks, cigarettes and even durables, over the last one month or so prompting questions on their move just ahead of the Budget. According to Times report, the preemptive move in certain cases is possibly to soften the impact of an expected increase in taxes, and a partial rollback of excise duties in the budget, later this week. Most companies, however, blame rise in input costs as the reason for the price hikes. So, soft drink prices are already up by 20%, durable and home appliances by 2-5%, cigarettes nearly 7%, coupled with an increase in prices of malted food drinks and food items, while confectionery and biscuit major like Britannia are evaluating an increase soon. That’s not all. While Hindustan Unilever has raised prices of select products recently, Nestle is also said to have increased prices of certain food products. Over the last couple of months, there has been intense speculation that the government may pull back a part of the economic stimulus, which reduced excise duties (in two tranches) on most consumer sectors. Certain sectors had passed on the benefit of the excise duty cut to consumers, slashing prices in the range of 2%-5% last year. The consumer electronic sector, which recorded a strong double-digit growth last year due to the stimulus package, is planning to raise prices mainly on account of rising input costs. While companies like Videocon and Godrej & Boyce have already announced a hike ranging 2%-5% on electronics and home appliances recently on account of higher prices of copper, resin and steel, others like Samsung India is holding the price, and will look at the Budget before announcing it. Since these hikes have happened with the Budget just round the corner, questions are being raised on the timing of such a move. The biscuit industry is plagued by a plethora of taxes, mainly value-added tax unlike other food items like chips, with many states increasing VAT by 2%. Certain companies, however, say that the hike is not linked to the Budget.

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