Israel, Iran war: FMCG firms hike prices, shrink pack sizes as costs rise

Rising crude oil prices directly impact FMCG companies through increased packaging, logistics, and raw material costs. This forces them to choose between margin compression or passing costs to consumers, potentially dampening already fragile consumer demand.

• •FMCG firms are raising prices and offering less product (shrinkflation) to manage higher costs.
• •Crude oil prices are increasing due to the Israel-Iran conflict, leading to higher packaging and transport expenses.
• •The situation could impact the recovery of consumer demand for snacks and drinks.
• •Some firms are introducing smaller pack sizes to keep items affordable despite rising costs.
• •Risk flag: Further escalation of geopolitical tensions leading to sharper crude oil spikes.