Grocery bill: Due to the increase in the prices of commodities like palm oil and copra, FMCG companies are planning to increase the prices of household items like cooking oil, soap, and detergent (Nirma). According to a TOI report, grocery bills may increase due to this.

Why are palm oil prices rising?

In its September quarter update, Godrej Consumer said that the rise in palm oil prices is leading to difficult operating conditions which will lead to lower earnings. Palm input costs have been rising since March, the highest ever to date. Analysts expect the price hike to be in large packaged goods rather than small packets.

Why inflation may increase

The RBI had recently cautioned that unpredictable weather events, worsening geopolitical conflicts (which could impact global commodity prices) and the recent rise in prices of some commodities (such as edible oils, wheat, and key vegetables) could pose upside risks to inflation.

Oil prices also rose at the end of the quarter due to the increase in import duty.

Marico, maker of Saffola Oats and Parachute Coconut Oil, said copra prices rose ahead of internal forecasts and the company has already taken one round of price hikes at the end of the second quarter. In addition, vegetable oil prices also moved higher at the end of the quarter due to the recent import duty hike. The company expects a "moderate lag" in operating profit growth in the second quarter due to partial absorption of higher input costs and is monitoring potential uncertainty in crude oil prices given geopolitical tensions.

“Input costs will increase for most FMCG companies,” Akshay D’Souza, an independent consumer consultant, told TOI. “The Israel-Iran conflict is expected to increase crude oil prices and this could impact the prices of almost everything, leading to inflation across all commodities. Also, as more countries get involved in the conflict, it is expected that commodity supplies will be disrupted.”