Taking steps to control inflation was the right thing to do, FICCI president and Hindustan Unlilever MD and CEO Sanjiv Mehta told in an interview on Thursday following the RBI repo rate hike. The Reserve Bank of India has increased the key interest rates by 40 basis points or 0.40 per cent in a bid to tackle skyrocketing inflation in India amid geopolitical tensions and supply shortage. Mehta’s comments comes weeks after HUL increased the price of a range of its products, including soaps, instant noodles, and toothpaste among others.
“The (repo) rate hike by RBI was inevitable and this was the right thing. Inflation bites the poor more than anyone, taking steps to reign in inflation was the right step,” the HUL CEO told CNBC TV18 in an exclusive interview.
However, Mehta noted that ensuring growth while tackling inflation will be a tightrope for the country. “Inflation today is not homegrown, it’s partly due to pandemic, impact of palm oil export ban, rising oil prices and geopolitics,” he said. “We need to ensure people are protected and growth is not stalled,” Mehta told CNBC TV 18.
“Private consumption and capex have been soft for a while and inflation has been unprecedented The government should front load the promised capex of 7.5 lakh crore in the budget to ensure growth in the current environment,” Mehta said in the interview, when asked about the rising inflation rates in the country.
“We have seen prices of toilet soaps, laundry products rising to current levels, we see a stress on consumption levels,” the HUL CEO said. From February to April, leading brands Hindustan Unilever Limited and Nestle announced a series of price hikes on several products.
Soaps and cleansing products of HUL including Surf Excel Matic, Comfort fabric conditioner, Dove body wash, Ponds Talcum powder, Lifebuoy, Lux and Pears soaps have seen steep price rises over the last three months. Kissan Jam, Horlicks, Pepsodent, Wheel detergent, Vim Liquid and Vim Bar have also seen a hike in their prices.
The recent hikes in prices have also resulted in a decline of demand. “Decline in consumption has been sequential, more in rural areas compared to urban. We are not seeing demand recovery yet, consumers are rationing spends,” Mehta said while speaking about the issue.
The FICCI chief added that the stress on volumes will subside once the prices are lowered. “Stress on volumes would go away once we see a tapering of commodity prices We will take cost saving measures but price rise will be the last resort for HUL,” Mehta said.
Taking about the Indonesia Palm oil export ban, Mehta said that its impact should be temporary. Indonesia has banned the export of palm oil on supply shortage since April 28 this year. Mehta noted that while there was no immediate impact on palm oil supplies, India will see the prices of palm oil go up in the coming months. This is likely to further raise inflation rates, as palm oil is used to make several products including soaps, beauty products etc.
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