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Mayday for FMCG, electronic companies as demand begins to sputter – Economic Times

India’s fast-moving consumer goods (FMCG) market’s value growth fell 16.5% sequentially in May compared with the month of April, signalling reduced consumer spends on daily essentials due to rising prices across products.

Sales grew 33% as compared to the May of last year, when the country was in lockdown due to the deadly Delta wave, according to the latest report by Bizom, a sales automation firm that tracks 7.5 million retail stores.

Even for electronics such as air-conditioners and refrigerators, sales fell up to 15% in May on a sequential month comparison, industry executives said.

“Overall, there’s been a volume compression in the recent past due to high inflation and resultant price hikes. This rising inflation continued to exert pressure on the consumer’s wallet, which led to softening of demand and downtrading across product categories,” said Mohit Malhotra, chief executive officer of . “While there is immediate pressure, we expect rural consumption to drive back growth by the end of the first quarter.”

Sales shrunk across categories in May led by commodities like edible oil and packaged atta which fell 32% followed by home care and confectionery which declined by 10% respectively. Even packaged food fell 6% while beverages shrunk 1% due to a higher base in April that saw record sales for all summer categories.

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Experts said consumers are stocking smaller packs of commodities, hoping for a price drop in the future.

“This is definitely a wake-up call for companies relying on price-led growth alone. It also shows price increases can only help value growth to an extent and then starts impacting consumption to a level where both value and volume suffers,” said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom.

For ACs, refrigerators and smartphones, there has been similar pressure on growth in May due to increase in product prices and overall inflationary environment pinching the pocket of consumers. Prices of these products have risen up to 8% since January due to increase in input costs.

“Apart from inflationary pressures, there were intermittent rains in the second half of May in several parts of the country denting demand for electronic products after a dream run in March and April. Sales of entry-level products were the worst hit in May,” Kamal Nandi, business head, Godrej Appliances said.

Compared to the year-ago lockdown period of May, sales of ACs, refrigerators and washing machines grew up to 80%.

Lloyd’s sales head Rajesh Rathi said sales have taken a hit last month and trade is reluctant to stock up but primary sales to trade should improve in June as there is an energy rating change from July when prices will go up again.

is a Havells-owned electronics brand.