Your soap or cookies may be lighter, but not expensive.

Your soap or cookies may be lighter, but not expensive.

The development isn’t unique to India. Eateries in the US, including Subway Restaurants and Domino’s Pizza Inc., have taken similar steps to shrink portions in order to cut costs.

As India’s inflation surges, the modest single-serving packets of staples like soap and cookies aren’t budging in cost – – they’re simply getting lighter. By paring the weight of fixed-cost things – – famous among lower income and rural areas  at what might be compared to about a penny, nickel or a dime – – firms are utilizing “shrinkflation” to adapt to higher info costs while keeping clients. Organizations including Unilever Plc’s India unit and domestic consumer products firms Britannia Industries Ltd. also, Dabur India Ltd. have moved toward lighter loads in their cheapest packages amid rising costs of edible oils, grains and fuel.

The tactic has emerged as Indian consumer prices for the past four months have run above the 6 per cent upper limit of the central bank’s target range. Headline inflation for April surged to an eight-year high of nearly 7.8 per cent, data showed Thursday, fueling expectations of further interest rate increases after the Reserve Bank of India’s surprise hike last week.

“We will see more inflation in the next two to three quarters,” Ritesh Tiwari, Chief Financial Officer of Hindustan Unilever, whose products are used by nine out of 10 Indian households daily, said in a call with media after the company’s fourth quarter earnings on April 27. Reducing the volume in certain price-point packs is “the only way for us to take price increases.”

For example, a Rs 10 (13 cent) bar of the company’s popular Vim soap weighs 135 grams (4.8 ounces), compared with 155 grams about three months ago, a Delhi-based distributor said. At the same price point, a pack of aloo bhujia — a popular crunchy and salty snack — made by Haldiram’s fell to 42 grams from 55 grams, according to retailers. Hindustan Unilever and Haldiram’s didn’t respond to emails seeking comments.

Food companies are under pressure due to rising edible oil prices, with Nestle India’s first quarter profit coming in below estimates, also thanks to dairy prices. “Every category has had inflationary headwinds,” said Sanjay Singal, chief operating officer for the dairy and beverage segment of ITC Ltd., maker of consumer products that includes chips, cookies and soaps

Dabur has reduced the volume — also known as “grammage” — on certain products to protect the 1, 5 and 10 rupee “sacred price points,” Chief Executive Officer Mohit Malhotra said in an emailed response to questions. The operating environment has been “extremely challenging” with inflation causing “sharp drop in consumption across the board,” he said.

Britannia had passed on 65 per cent of its incremental input cost rises in 2021-22 by reducing weights on their existing price points. Now, the volume cut “might end up being even higher than that,” Managing Director Varun Berry said in a call with analysts April 5.

Another emerging tactic is offering so-called “bridge” packs between popular prices. Hindustan Unilever introduced a new size between its 10 and 35 rupee Lifebuoy soap that allows it to trim the weight back, Tiwari said. The Central Statistics Office, which publishes official inflation figures, didn’t respond to a request for comment.

Determining the impact of shrinkflation on overall consumer prices might be difficult to quantify, according Rahul Bajoria, an economist at Barclays Plc in Mumbai. “Do you take a bar of soap, or do you take the weight of the bar?” he said. “How do you calculate inflation with that kind of sample?”

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
After a strong sell-off, investors look for signs of a market bottom
After a strong sell-off, investors look for signs of a market bottom
Despite those losses, many widely followed indicators do not yet show the pervasive panic, supercharged volatility and outright pessimism that have emerged ...
REC net profit up 14% to Rs 2,301 cr in March quarter on higher revenues
REC net profit up 14% to Rs 2,301 cr in March quarter on higher revenues
In 2021-22, the consolidated net profit also climbed to Rs 10,035.70 crore. State-owned REC Ltd posted a 14 percent ascend in its consolidated net profit to ...
South Africa detects first case of Lassa fever since 2007
South Africa detects first case of Lassa fever since 2007
South Africa has identified an imported case of Lassa fever, a hemorrhagic virus harbored by rats and communicated to people. The infection is quick to be ...
PM Modi takes aim at Congress, claiming BJP-led government has restored faith in youth's innovative skills
PM Modi takes aim at Congress, claiming BJP-led government has restored faith in youth’s innovative skills
“After 2014, we revived the spirit of innovation in India’s youth. We focused on ‘idea, innovation and industry’. First, we invested in infrastructure and ...
Porsche SE says viability of sports car maker IPO depends on market conditions
Porsche SE says viability of sports car maker IPO depends on market conditions
“We are working on financing plans in order to be robust in different valuation scenarios for an IPO (initial public offering),” Porsche SE chairman ...
The US Senate confirmed Powell for a second term as Fed chairman despite rising inflation
The US Senate confirmed Powell for a second term as Fed chairman despite rising inflation
The US Senate confirmed Jerome Powell as chairman of the Federal Reserve on Thursday, reaffirming his status as the country’s central banker for another ...
Aeroflot buys eight stranded Airbus from foreign leasing companies
Aeroflot buys eight stranded Airbus from foreign leasing companies
Aeroflot did not specify which firms the aircraft had been leased from. But the purchase could be a bid to maintain good relations with lessors by making use ...
FINANCIAL TIMES PRESS DIGEST - MAY 13
FINANCIAL TIMES PRESS DIGEST – MAY 13
The top stories in the Financial Times are listed below. These articles have not been verified by Reuters, and we cannot guarantee their authenticity. ...
Nissan says it's too early to predict EV unit spin-off
Nissan says it’s too early to predict EV unit spin-off
“It’s too early to consider because of our diversified market portfolio and diversified product portfolio,” Nissan COO Ashwani Gupta said. It is too soon to ...
US economic outlook weakens, inflation likely to persist
Wants “several months” of inflation falling to call the peak
“Risks to inflation remain strongly on the upside, especially in the midst of the continuing war in Ukraine and the potential that the zero-COVID policy in ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo