Fridge, AC prices may come down as commodity rates cool off

Companies have recently raised the prices of several products due to the increase in their input costs for more expensive raw materials.
Representative image
Representative image

CHENNAI: Even as the world commodity prices are seeing a drop now amid recession fears, prices for refrigerators, air conditioners, microwaves and washing machines may soon drop as companies seek to pass on the benefits of falling input costs. Companies have recently raised the prices of several products due to the increase in their input costs for more expensive raw materials.

After hitting peaks this year following the Russia-Ukraine war, copper is now 21% cheaper and steel 19% lower and aluminium prices are 36% lower than levels in April this year, according to a recent report from brokerage firm ICICI. Values. The drop in commodity prices will also increase companies’ margins. The development will also help control general inflation.

With a correction in input prices, the need to raise prices has decreased. According to ICICI reports, a reprieve was essential considering durables have raised prices relentlessly over the last couple of years. The cumulative price increase was more than 20 per cent in the last two years.

According to reports, higher margins will prompt manufacturers of air conditioners, refrigerators, microwaves and washing machines to increase their advertising efforts and offer better customer discounts. The case for the client is strengthened as these developments arrive in the second half of the year, with the festive season just a few months away.

After the war between Russia and Ukraine began in late February, the global economy continues to grapple with multi-decade high inflation and slowing growth, persistent geopolitical tensions and sanctions, and high prices for crude oil and other commodities. However, now, the prices of crude oil and other raw materials have started to decline.

According to the minutes of the Monetary Policy Committee of the June 2022 meeting, the tense global geopolitical situation and the resulting high commodity prices create considerable uncertainty in the outlook for domestic inflation. Restrictions on wheat exports should improve domestic supplies, but shortfalls in rabi production due to the heat wave could be an offsetting risk. The forecast of a normal monsoon in the southwest bodes well for kharif agricultural production and the food price outlook.

Also, reports suggest, while prices for some commodities, such as metals and fertilizers, have weakened somewhat, most food and all energy prices remain high.

Retail inflation in India it stood 7.04% in May, the latest data available to date. Although the inflation rate of 7.04 per cent is lower than the 7.79 per cent recorded in April, it is still beyond the RBI’s comfort range of 2-6 percent.

To control inflation, the Reserve Bank of India (RBI) raised the key repo rate by 50 basis points (bp) in early June. It was the second increase in nearly a month after the RBI’s Monetary Policy Committee raised 40 basis points in an off-cycle policy review in early May.

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