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Will Milk, Soap, Shampoo Prices Come Down After Edible Oil Price Cut? What FMCG Makers Say


Though the edible oil prices have come down as the import duties on them have been cut by the government, fast-moving consumer goods (FMCG) companies said they will not cut prices but instead will reduce the pace of price increases, according to a media report. The edible oil prices have been reduced by up to Rs 15-20 per litre.

The branded edible oil makers are reducing the prices on the oil, including palm oil, as the central government recently cut import duties on them. The government this week reduced the base import prices of crude palm oil, soyoil, gold and silver.

FMCGs include milk, soap, shampoo and biscuits. Palm oil and its derivatives are used in detergents, food products, biofuels and cosmetics. These are used in the manufacturing of several daily consumption goods such as shampoos, margarine, soaps, chocolates, biscuits and noodles. So, any rise in palm oil prices will push up the input costs across these industries.

The new base import price of crude palm oil now stands at $1,620 per tonne as against $1,625 per tonne. Similarly, RBD palm oil and RBD palmolein base prices have also been reduced to $1,757 per tonne and $1,767 per tonne, respectively. The base import price of crude soya oil has been reduced to $1,831 per tonne, compared with $1,866 per tonne. The base prices are used to calculate the amount of tax an importer needs to pay.

“The pace of price hikes will come down but there won’t be price cuts… We have been passing on just half the entire commodity inflation burden earlier and instead took a hit on margins and cut costs in operations,” said the ET report quoting Anil Chugh, president (consumer care business) of Wipro Consumer Care and Lighting, which sells brands such as Santoor.

Recently, companies across the sectors increased the prices of their products citing high input costs. Some of them resorted to reducing the weight of products rather than raising prices, so that sales are not impacted. In two months of April and May this year, FMCG major Hindustan Unilever Ltd (HUL) raised the prices of its goods two times citing rising input costs.

India’s palm oil imports in May fell 10 per cent as compared to April as top producer Indonesia curbed exports of the edible oil. The Solvent Extractors’ Association (SEA) said India imported 5,14,022 tonnes of palm oil in May, down from 5,72,508 tonnes in April.

India imports over 13.5 million tonnes of edible oil every year, out of which, 8-8.5 million tonnes (around 63 per cent) is palm oil. The country is the world’s largest importer of palm oil and is dependent on Indonesia and Malaysia for its demand. Nearly 45 per cent of the total edible oil imports come from Indonesia and the remaining from neighbouring Malaysia. India imports roughly 4 million tonnes of palm oil from Indonesia each year.

Indonesia in April had banned the palm oil exports. The export ban was not applicable to crude palm oil but will only cover refined, bleached, deodorised (RBD) palm olein. After almost a month of announcing the ban, the country lifted the restriction May 23.

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