Rising fuel cost pushes India Inc to hike prices
MUMBAI/NEW DELHI/CHENNAI/BENGALURU: Rising fuel expenses are having a cascading effect on manufacturing costs across sectors, which is resulting in higher prices for the end consumer. On Thursday, RBI governor Shaktikanta Das also pointed out that rising fuel prices have a cost-push factor.
According to auto companies and transporters, truck rentals have gone up 10-12% in the last two months and most companies are currently negotiating freight rates. Some like MG Motor said they plan to take a price hike too.
“Typically, freight comprises 2-2.5% of the cost of a car. But, due to the jump in sea freight and the 10-12% increase in truck rentals, we will have to go in for another round of price hikes of around 2-3%,” said MG Motor India president and MD Rajeev Chaba. He is currently negotiating these rates with the transporters.
For trucking, almost 45% of the cost is due to fuel. And with fuel prices having gone up 65 times since the onset of Covid, the total increase has been upwards of 30%. Logistics startup Rivigo’s founder and CEO Deepak Garg said freight prices are unsustainable today and unless there’s an immediate correction of 15-20%, the trucking industry could face difficulties.
