How inflation impacts FMCG stock performance

The Relationship Between Inflation and FMCG

– FMCG companies sell everyday necessities, which remain in demand despite inflation.
– However, inflation influences costs, pricing, and profit margins.

Impact on Input Costs

– Inflation increases the cost of raw materials like grains, oil, and packaging.
– Higher production costs can squeeze margins if price hikes aren’t passed on to consumers.

Price Sensitivity Among Consumers

– Price hikes can reduce demand for premium or discretionary FMCG products.
– Companies often launch smaller packs or focus on value-for-money offerings to retain customers.

Stock Performance During Inflation

– Essential product makers (like food and beverages) show resilience.
– Companies with exposure to premium segments may face short-term headwinds.

Long-Term Prospects of 
FMCG Stocks

– FMCG stocks tend to recover as inflation stabilizes, thanks to consistent demand.
– Strong brands and cost management strategies help weather inflationary pressures.