Consumer durables prices to go up again on low rupee

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Priyanka Sahay | 11 Jun, 2011
If you were planning to buy a refrigerator or an air conditioner this month, do it soon. Companies are about to raise the prices of consumer durables again to offset the impact of a depreciating rupee and rising input costs.

Industry sources say the price increase this time would be between 4 to 10 percent. Most of the firms had hiked prices post-budget.

"The company will be increasing the prices of refrigerators and washing machines," Mahesh Krishnan, vice-president, home appliances, Samsung India, told news agency.

Krishnan could not give the exact percentage hike as the company is still computing it. "We are still working on that," he said.

Industry and trade sources say the prices would vary depending on the import content of the products. Consumer durables have 30-70 per cent import content. Almost all the firms import their top-end refrigerators, air-conditioners and washing machines as "completely-built units". Insiders said inflation in petroleum products and freight charges have added to the costs.

Haier, which plans to launch a six-door refrigerator series for the Indian market, said it was hiking prices first in washing machines and LCD TVs.

"We are increasing price this month by 3 to 5 percent in washing machines and LCD TVs," said Eric Braganza, president, Haier India.

Whirlpool, LG and Godrej are estimating the pressure on margins before announcing the hikes.

"Pricing is no longer an occasional event but more dynamic, based on evaluation of the many variables that influence pricing," said Shantanu Dasgupta, vice president, corporate affairs and strategy, Whirlpool India.

He said the basic reason for price hike was commodity inflation and rupee depreciation. Whirlpool had increased prices of its cooling category products in May.

Consumer electronics maker Panasonic India said there will be a slight increase in the product prices due to the rupee depreciation.

"This is the third time within a year when prices of consumer durables are increasing due to rupee depreciation and escalation in raw material costs," said Manish Sharma, managing director, consumer product division, Panasonic India.

"We are also forced to increase the product prices from the first week of July. On white goods the hike will be four percent and the increment on television will be about two percent," said Sharma.

The companies are conscious of the effect of the price rise on sales. Ganesh Ramamoorthy, research director, Gartner, said in these inflationery times, the disposable income of the consumer has gone down and he has started saving money by deferring purchases.

"If at this point there is a price hike, the sales of the firms would definitely be affected."

Agrees Dasgupta. "Disposable income in the hands of consumers has dwindled in the face of inflation in areas such as food and fuel and the rise in interest rates. This summer has been affected not only because of the recent and sharp depreciation of the rupee but for a variety of factors. The seasonal demand has been low."

The summer started off on a weak note, as people witnessed the coolest April in Delhi in 30 years.

According to Gartner, the Rs.350 billion industry will witness a growth of 8 to 10 percent this year against almost 14 percent in 2011.