Raw wounds

About 65 per cent of the 40 commonly used raw materials of the FMCG industry are witnessing price inflation. That's the alarming analysis by Kotak Institutional Equities. Agri commodities have witnessed high levels of inflation: milk is up 26 per cent (YoY); sugar, 24 per cent; wheat, 21 per cent; and barley, 20 per cent. Coffee is also up 21 per cent. Then there are non-food inputs. Crude is up 45 per cent (YoY). Palm oil is up 45 per cent, too. And titanium-dioxide is up 20 per cent. Figure 1 mentions some key FMCG ingredients that have gone up in the last one year, along with the names of the companies that could be impacted by this price rise. The impact on companies The inflation in agri commodities is expected to hit companies like Nestle (milk powder is a key ingredient, as is coffee, in Nescafe