Falling commodity prices expected to boost profits of FMCG companies: Report
Prices of several essential inputs have eased, which could benefit major players. During Q1FY26, most agri-commodity prices fell when compared to Q4FY25.
This trend points to a moderation in year-on-year (YoY) inflation and offers relief to FMCG manufacturers, who have been grappling with high input costs over the past few quarters.
Wheat, a staple raw material for several FMCG products, saw a price correction of 13 per cent on a quarter-on-quarter (QoQ) basis. Barley prices also dropped by 13 per cent QoQ, although they were still up 10 per cent YoY.
A sharp decline in palm oil prices -- down 16 per cent QoQ -- was particularly notable, especially after the government reduced import duties on the product by 10 per cent at the end of May 2025.
This move is expected to bring further downward pressure on prices in the near term.Packaging costs also trended lower during the quarter. High-Density Polyethylene (HDPE), used extensively in packaging, remained soft. Crude-based packaging inputs witnessed only a marginal 3 per cent increase in prices, a manageable rise for most companies.
Among dairy inputs, Skimmed Milk Powder (SMP) rose slightly by 4 per cent QoQ, and liquid milk increased by just 1 per cent QoQ, marking a relatively stable pricing trend in dairy, which is crucial for food and beverage manufacturers.
However, not all commodities followed this deflationary trend. Copra, a key input for coconut-based products and edible oils, emerged as an outlier.
Overall, except for dairy and select inputs like copra and LLP, most commodity prices declined in the range of 2 per cent to 14 per cent. This downward trend is expected to provide significant cost savings for FMCG firms, allowing them to either protect their margins or pass on benefits to consumers in the form of price reductions. (ANI)
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