Explained: A double dose of inflation! Everything from soap to biscuits will become more expensive, and your kitchen budget is about to deteriorate

Domestic FMCG company Dabur India, which makes Vatika shampoo, is expected to increase prices in the first quarter of fiscal 2027. 

Dabur reported a 15.75% year-on-year increase in consolidated net profit in the fourth quarter of fiscal 2026. This increase was primarily driven by broad-based volume growth, although inflationary challenges persist.

Dabur's Global Chief Executive, Mohit Malhotra, said another round of price increases is expected in the next quarter due to continued inflationary pressure, particularly in packaging material prices, which are rising due to ongoing tensions in the Middle East. Dabur has already increased prices by approximately 4% in the current quarter.

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Dabur isn't alone. HUL, the country's largest FMCG company, and other major companies are also facing inflationary pressures due to significant increases in component and packaging costs. India's FMCG sector ended the fourth quarter of fiscal year 2026 on a largely positive note.

Demand improved, especially in rural markets, with volume growth strengthening across several categories. And comments from management at major companies indicated that the worst of the consumption slowdown may be over. 

But the earnings season also highlighted another trend that could be even more significant for households over the next few quarters: the continued pressure on input costs.

Inflationary pressure remains

From edible oil and dairy products to packaging materials and freight costs, several FMCG companies have indicated that inflationary pressures are either persisting or beginning to re-emerge. 

This concern has been exacerbated by continued instability in West Asia. On Thursday, Iran and the US exchanged fire again, despite a ceasefire in place. This has renewed fears of disruptions to energy supplies and volatility in crude oil prices.

Add to this the potential for a rise in petrol and diesel prices if the Middle East tensions continue, and the possibility of a below-average monsoon, and your household budget is bound to be strained. 

Furthermore, the full impact of the economic disruption caused by the Middle East conflict and the closure of the Strait of Hormuz in the previous quarter has yet to be fully realized.

impact of crude oil prices

For India, high crude oil prices are ultimately not limited to petrol pumps, but have far-reaching implications. Crude oil-related inflation impacts transportation, packaging, chemicals, and manufacturing costs, which determine the prices of everyday household products. 

Fourth-quarter results and commentary from companies like Hindustan Unilever, Nestlé India, Marico, Dabur India, ITC, Britannia Industries, and Godrej Consumer Products indicate that the FMCG industry is bracing itself for a more difficult cost environment, despite improving demand.

One of the clearest trends during the fourth quarter earnings season was the improvement in rural demand. After a prolonged period of subdued consumption, many FMCG companies reported improved volume growth from smaller towns and villages. 

While this earnings season saw a real, albeit modest, improvement, companies were now facing renewed pressure on margins due to rising commodity and input costs. 

This combination of improving demand and rising input costs is important because it often triggers a price increase for consumer products.

Inflationary pressure on HUL

FMCG giant Hindustan Unilever's (HUL) fourth-quarter performance was seen as a clear indication of a significant improvement in the Indian consumption environment. 

The company reported stronger revenue growth and better volume expansion than in previous quarters. 

Analysts tracking the company described it as one of HUL's best quarters in recent years in terms of demand. However, commodity inflation remained a concern in categories such as tea, crude oil-related products, and packaging materials.

The company indicated that it will continue to employ a mix of price adjustments and cost management to protect its margins. 

This is significant because HUL's portfolio includes soaps, detergents, tea, coffee, personal care products, and packaged foods, making it one of the clearest indicators of household consumption trends in India.

Nestle India's Input Cost Risk Factor

Nestlé India saw continued strong growth in premium categories and urban consumption segments during the fourth quarter. The company's packaged foods and beverages portfolio performed well, and analysts noted that premium products remained the main driver of growth.