Indian Consumer Goods Makers Eye Post-Diwali Price Increases

By Pritha Pahari

What?  

Indian FMCG companies are running out of ways to protect margins as input costs continue to rise, putting pressure on packaged food and household product makers to consider another round of price increases after Diwali.

Companies have already used smaller packs to keep prices affordable for consumers. However, there is limited room to reduce quantities further, particularly for products sold at low price points.

As Satish Meena, founder of Datum Intelligence, puts it, “They can do it for one quarter, they can do it for two quarters, but at a certain point they have to pass it on to the customer.”

A Rs 10 pack of Parle-G biscuits, for instance, leaves little scope for further cuts without risking consumer dissatisfaction.

Several companies have already taken pricing actions. Britannia, Hindustan Unilever (HUL), Dabur and Godrej Consumer raised prices by around 2-5% in the June quarter. Tata Consumer Products increased tea prices by 8-10% between the June and September quarters. It also raised the price of its Rs 30 salt pack to Rs 32 in May and Rs 34 in October.

HUL took price increases of around 7.5% in the September quarter, while Godrej Consumer indicated that it would continue calibrated increases, particularly in soaps and liquid detergents. Dabur confirmed pricing actions in its October business update, while Britannia had indicated a further 1.5-2% increase, largely through smaller packs.

Why?

The pressure comes from rising input costs since late February, when the Middle East conflict began disrupting supply chains and pushing up crude-linked costs.

In October 2026, plastic packaging costs were reported to have increased by 30-40%. Palm oil prices rose 21% year-on-year in September, while sunflower oil increased 14%, soybean oil 9% and mustard oil 8%. Sugar prices climbed 18%, while tea prices rose 10%. Arabica coffee increased 19% quarter-on-quarter and cocoa rose 48%.

Companies initially try to absorb these increases, but that becomes difficult to sustain over several quarters. Shrinking packs allows them to maintain familiar price points, while visible price hikes risk pushing consumers towards competing brands.

Why Does It Matter?

The choices facing FMCG companies could affect both consumer spending and their market shares. Lower-income households are particularly vulnerable because everyday essentials account for a larger share of their budgets. Biscuits, noodles, soaps, detergents and cooking oils are especially sensitive to price changes.

Demand has remained relatively resilient, with Nestlé India reporting 20.5% sales growth and double-digit volume growth in the September quarter. However, volume trends are mixed across companies. Tata Consumer's India branded volume growth eased from 16% in Q4 FY26 to 11% in Q2 FY27.

With input costs potentially remaining elevated into early 2027, companies may have to choose between absorbing higher costs, reducing pack sizes further or raising prices. For consumers, that could mean paying more or getting less for the same money. For FMCG makers, getting the balance wrong could mean losing shoppers to competitors.

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54.7

That’s where India’s manufacturing Purchasing Managers’ Index (PMI) stood in October, down from 55.1 in September. While the dip points to a moderation in factory activity, the sector continues to expand.

The PMI tracks changes in manufacturing activity through five indicators: new orders, output, employment, suppliers’ delivery times and stocks of purchases. A reading above 50 signals expansion compared with the previous month, while a figure below 50 indicates contraction.

Origin: The moderation came as growth in factory output and new orders eased from September. However, stronger overseas demand provided some support. New export orders grew at their fastest pace in six months, with manufacturers reporting gains across markets including the US, UK and UAE.

“Although some material and energy costs increased, overall input and output price pressures eased slightly from the previous month,” said Pranjul Bhandari, chief India economist at HSBC.

Manufacturers also increased input inventories at the fastest pace in eight months, building buffers against potential supply disruptions. Meanwhile, input cost inflation fell to its lowest level since February.

Future: Looking ahead, business confidence weakened, with only around 18% of surveyed manufacturers expecting output to rise over the next 12 months. Demand for industrial automation and technology solutions could support growth.

IndiGo Rethinks Its Strategy

IndiGo CEO Willie Walsh says geopolitical disruptions, rising fuel costs and the airline's international expansion plans are prompting a rethink of some of its long-held strategies. The airline may deploy capacity to Asia-Pacific and Australasia markets earlier than planned as Pakistan's airspace ban and West Asia disruptions affect westbound operations, Reuters reported.

What's Next: IndiGo's fuel expenses surged 67.2% year-on-year to Rs 9,967 crore in Q2 FY27, contributing to a consolidated net loss of Rs 1,879 crore. Walsh said the airline is undertaking a comprehensive review of fuel hedging, Business Standard reported.

Highlight: Walsh also backed a partial shift of international operations to Navi Mumbai airport, calling it a long-term growth opportunity for IndiGo despite opposition from foreign carriers, according to The Economic Times. He said the airline's decisions would be guided by its own expansion plans rather than other carriers' views.

KFC Growth Gives Devyani A Lift

Devyani International, which operates KFC and Pizza Hut in India, reported a sharp decline in its second-quarter loss as stronger sales at KFC outlets helped offset rising costs. Its shares rose as much as 5.8% on Monday.

By The Numbers: The company’s consolidated net loss narrowed to Rs 2.4 million from Rs 218.9 million a year earlier. Revenue rose 10.4% to Rs 15.19 billion, while expenses increased 8.3%.

Same-store sales at KFC outlets grew 4.4%, marking the third consecutive quarter of growth. Consolidated gross margin fell 60 basis points from the previous quarter but increased 70 basis points year-on-year to 68.5%.

Quick-service restaurant chains are offering more discounts and value meals to attract customers as competition from local rivals increases. Higher raw material and energy costs have added to the pressure.

Forecast: Chairman Ravi Jaipuria said food inflation and rising interest rates could keep discretionary spending under pressure. The company remains on track to add 200-220 net new outlets this financial year.

Devyani shares were trading 4.3% higher at Rs 125.6 at 12:11 p.m. IST.

Reliance’s Biggest Gain In Six Years

Reliance Industries shares jumped 11.6% on Monday to close at Rs 1,300, their best session since April 2020, after a stronger-than-expected September-quarter profit. The gain added more than $19 billion in market value, a record for an Indian company, and made Reliance the top Nifty 50 gainer as the index rose 1.7%.

Overview: Net profit surged 40.6% to Rs 25,548 crore, beating estimates of about Rs 21,400 crore, helped by stronger refining and petrochemical margins.

Jefferies said the oil-to-chemicals business “hit the bullseye,” while Jio Platforms posted a nearly 14% profit rise in its first results since its record IPO.

Brokerage Avendus Spark upgraded the stock to “add,” leaving Reliance with 32 buy ratings and no sell calls, a first since 2017.

Critical Moment: Despite the surge, the stock is down more than 17% in 2026, and Citi said sustained gains need a retail recovery. Retail revenue rose just 1.3%.

A New Winter, But Same Old Smog

Winter has barely begun but Delhi’s severe air pollution problem has returned. 

Fast Facts: The capital’s Air Quality Index (AQI) touched 307 on November 2, pushing it into the ‘very poor’ category. The situation was worse in several neighbourhoods, with Jahangirpuri recording an AQI of 417, or ‘severe’. Noida also crossed 300.

Under India’s AQI scale, readings between 201 and 300 are classified as ‘poor’, 301-400 as ‘very poor’ and anything above 400 as ‘severe’. Prolonged exposure to very poor air can cause respiratory illnesses, while severe pollution can affect even healthy people.

Flashpoint: On November 2nd, the Commission for Air Quality Management (CAQM) invoked Stage II of the Graded Response Action Plan (GRAP) across Delhi-NCR. The additional measures include more frequent mechanical road sweeping, water sprinkling to control dust, higher parking fees and restrictions on the use of coal and firewood in eateries.

Context: But Delhi’s pollution is hardly just a winter problem. Vehicular emissions, industrial activity, road dust and construction contribute to poor air quality throughout the year. Seasonal restrictions may offer some relief, but they do little to address the underlying problem.

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Festive Spirits And Tax Promises Lift Markets

On Episode 1024 of The Core Report, financial journalist Govindraj Ethiraj talks to Professor Prasanna Tantri, Associate Professor of Finance at the Indian School of Business (ISB); Manoj Mishra, Partner & Tax Controversy Management Leader at Grant Thornton Bharat; and, Michel van Hoey, a senior partner in McKinsey’s Luxembourg office.

• Festive Spirits And Tax Promises Lift Markets

• Why Reliance Stock Prices Jumped On Monday

• Strong Results Continue To Pour In, As Consumption Stays Strong

• The Problem With Rising Bank Credit

• Will The Higher GST Numbers Sustain?

• Why India Is Now The Hottest Source And Destination For The Global Metals Industry