GST to moderate price growth, says Unilever CEO Graeme Pitkethly

MUMBAI: Unilever said softening commodity costs and the new Goods and Services Tax regime in India will moderate the Anglo-Dutch consumer goods major’s price growth by 30 basis points at the global level.

“We expect price growth to moderate,” Graeme Pitkethly, CFO at Unilever, said on Thursday. “There are two reasons for this. First of all, a little less pressure from commodity cost increases in the second half, and secondly, tax benefits from the introduction of GST in India will be passed onto consumers with an impact at the global Unilever level of around 28 to 30 basis points on price in the second half,” he told analysts after the firm reported a rise in underlying sales of 3% in the first six months of the year.

Earlier this week, its Indian unit Hindustan Unilever posted a 6% sales growth with flat volume growth due to trade destocking and reduced buying from one of its largest customer — canteen stores department. However, the maker of Lux soaps and Run detergent said its Indian subsidiary managed through the GST effectively and it expects to recover that volume shortfall in the second half.

“In India, the welcome introduction of the new GST prompted distributors and wholesalers to cut back their stocks during the transition period,” Unilever’s global chief Paul Polman told investors.