Falling rupee to affect prices of essential commodities
Updated: May 23, 2013 05:40:41pm
New Delhi, May 23, (KNN) The falling rupee may pinch your pocket as it will make import of major items like petroleum, crude oil and gold dearer.
This will undoubtedly affect the prices of essential items like food, electronic goods such as computer or buying a car.
India depends on imports for a large part of the crude oil it consumes; a weak rupee will influence petrol and diesel prices.
"Fuel being directly connected with the cost of transportation, prices of goods that are transported from one part of the country to another, such as food, are bound to rise. This will have a direct impact on the household budget," said media reports quoting Ernst and Young, Tax Partner, Paresh Parekh.
Many FMCG or fast moving consumer goods like soaps, detergents, deodorants and shampoos use crude oil as an input and hence will also cost more.
"The impact of rupee depreciation on the FMCG sector will be due to higher cost of imported raw materials. The companies were already facing cost pressures. The rupee depreciation has added to their woes. They will have to revise prices. Hindustan Unilever and Procter & Gamble have already taken steps in this direction. Many others will increase prices in the coming months," said FMCG analyst, Kaustubh Pawaskar.
Significantly, the effect of falling rupee on the automobile sector will be manifold. As these companies use imported components the input cost will increase. Apart from this they will have to pay higher royalty to foreign parent firms. Further, many have foreign currency loans in the form of external commercial borrowings and foreign currency convertible bonds.
Other commodities of daily use that are bound to become expensive are computers, televisions and mobile phones with imported components.
Even eating in a food joint will cost you more as many of these outlets import their kitchen equipment.
"The depreciating rupee has had a significant impact on our capital expenditure as we import a lot of special kitchen equipment. There has been an indirect impact too as a small part of inputs are imported by our suppliers. If the trend continues, we will be forced to pass on some burden to customers," said managing director and JV Partner, McDonald's India (North and East) Vikram Bakshi. (KNN)
This will undoubtedly affect the prices of essential items like food, electronic goods such as computer or buying a car.
India depends on imports for a large part of the crude oil it consumes; a weak rupee will influence petrol and diesel prices.
"Fuel being directly connected with the cost of transportation, prices of goods that are transported from one part of the country to another, such as food, are bound to rise. This will have a direct impact on the household budget," said media reports quoting Ernst and Young, Tax Partner, Paresh Parekh.
Many FMCG or fast moving consumer goods like soaps, detergents, deodorants and shampoos use crude oil as an input and hence will also cost more.
"The impact of rupee depreciation on the FMCG sector will be due to higher cost of imported raw materials. The companies were already facing cost pressures. The rupee depreciation has added to their woes. They will have to revise prices. Hindustan Unilever and Procter & Gamble have already taken steps in this direction. Many others will increase prices in the coming months," said FMCG analyst, Kaustubh Pawaskar.
Significantly, the effect of falling rupee on the automobile sector will be manifold. As these companies use imported components the input cost will increase. Apart from this they will have to pay higher royalty to foreign parent firms. Further, many have foreign currency loans in the form of external commercial borrowings and foreign currency convertible bonds.
Other commodities of daily use that are bound to become expensive are computers, televisions and mobile phones with imported components.
Even eating in a food joint will cost you more as many of these outlets import their kitchen equipment.
"The depreciating rupee has had a significant impact on our capital expenditure as we import a lot of special kitchen equipment. There has been an indirect impact too as a small part of inputs are imported by our suppliers. If the trend continues, we will be forced to pass on some burden to customers," said managing director and JV Partner, McDonald's India (North and East) Vikram Bakshi. (KNN)
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