– 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.