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Re fall to trigger price hike in home appliances

Source : BUSINESS_STANDARD
Last Updated: Sat, Dec 24, 2011 18:50 hrs
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Prices of home appliances such as refrigerators, washing machines and microwave ovens besides gadgets like mobile phones, laptops and flat-panel TV are all set to rise further due to an ongoing slide in the rupee against the US dollar. Typically, imported components going into these products is significant. Some such high-end frost-free refrigerators, front-loading washing machines and almost all microwave ovens are imported. With the rupee fluctuating the way it is against the all-powerful American currency, a price hike is imminent, point out experts.

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Since September, consumer durable makers such as LG, Samsung and Videocon have increased prices of home appliances by about 7 to 8 per cent. Most players admit that another round of price hike in home appliances is in the offing in January. Even if prices go up by 2 to 3 per cent, the total quantum of price hike will be a neat 10 to 11 per cent.

For the average consumer, absorbing a 10 to 11 per cent hike in five months is not easy. But companies argue that they simply don't have a choice in the face of a weakening rupee. From August to now, the rupee has depreciated by close to 20 per cent. "The price hikes taken are hardly in tandem with the fall in the rupee," says Y V Verma, chief operating officer, LG Electronics.

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Companies have been cautious in their pricing policy, lest they drive away consumers with excessive inflation. For instance, most companies have held price lines in the flat-panel TV segment. That is, prices of LCD and LED TVs have not been raised by manufacturers with the exception of Panasonic, which upped prices in the LCD segment on online e-commerce and shopping platform eBay.

Mobile phones have seen a northward climb of 2 to 4 per cent in prices in the last few months. Almost all well-known brands such as Nokia, Samsung, Blackberry, HTC and Sony Ericsson have hiked prices. A Samsung spokesperson says the hike in prices is only for smart phones and feature phones. Typically, these products are either imported completely or they utilise imported components.

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While cameras have bucked the trend for now, according to Deepa Thomas, head, Pop Culture, eBay India, the picture does not look the same for memory devices such as pen drives, whose prices have shot up significantly with the rupee falling. An average 2GB pen drive today costs nothing less than Rs 250. Earlier it cost between Rs 150 and Rs 200. A 4GB pen drive, on the other hand, costs Rs 300, when the price earlier was closer to Rs 220 to Rs 250.

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Prices of imported watches, cosmetics and accessories are also likely to be up by 10 to 15 per cent early next year, perhaps around February 2012, due to the rupee depreciation, according to Govind Shrikhande, managing director, Shoppers Stop, the country's largest department store chain. About 30 per cent of Shoppers Stop's total merchandise is imported products and 42 per cent of its sales come from non-apparel products.

"One by one, brands are increasing prices as imports are getting expensive," says Shrikhande. "It will be a challenge to sell watches and accessories."


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