Paint makers set for price hike spree as input costs surge

By Remie OTIENO

Paint prices in Kenya are expected to soar further in the coming weeks due to the rising costs of raw materials, increase in excise duty and fuel prices as well as supply chain disruptions.

Market leader Crown Paintshttps://www.crownpaints.co.ke/ Thursday said it will increase the price of its products in the wake of the above-mentioned factors which has been made worse by the rising prices of crude oil triggered by the Russia-Ukraine conflict.

It comes even as prices had already risen 10% last year with the new move bound to push players increase further paint prices by another 5-10% in coming weeks due to rising input costs.

“The sustained increase in excise duty, fuel prices, and raw material costs has put considerable strain on our operations, making it necessary for us to review our pricing structure.

Effective from 15/08/2023, we will be adjusting the prices of some of our products to reflect the current economic landscape,” said the firm’s Rakesh Biswas the head of Head, Product Management Group.

Further adding that, “we understand the importance of maintaining stable and predictable pricing for your business operations, and we assure you that we have worked to keep the increase as moderate as possible where raw material costs have been marginally affected.”

Companies like Neuce Kenya Painthttps://www.neuce.com/p123-company-neuce-kenya-ke_en industry ltd, although a small player in the local market and depend heavily on imports, was one of the first players to increase prices after feeling the long-term effects of an economic vagueness, with the sinking value of the Shilling against global currencies and high fuel a growing concern.

“Apart from the forex, other major factors such as price variance in raw materials, fuel cost, clearing goods, NSSF and other costs have seen a similar upward spiral.

Read: https://www.financialfortunemedia.com/high-cost-of-paints-a-worrying-concern/

Due to these reasons, we will not be able to sustain the current prices and we have no alternative but to further review the prices,” reads a statement in part from the firm’s managing director Nelson Fiuza to its customers.

As a result, the company says it will be forced to pass on those charges to the consumer effective July 10, when new prices are affected, in a review that will reflect higher bills for its customers.

“We would like to bring to your attention that our price list will be reviewed and take effect from the 10th of July 2023,” continues the statement dated June 30, 2023.

Ordinarily paint prices like most basic commodities tend to increase during periods of high inflation. Inflation refers to the general rise in the price level of goods and services in an economy over a period of time, which can be caused by various factors such as increased demand, supply chain disruptions, rising production costs, or changes in monetary policy.

When inflation occurs, businesses often face higher costs for raw materials, transportation, and labor. This can lead to businesses passing those increased costs onto consumers by raising the prices of their products, including paint.

Additionally, during times of high inflation, the purchasing power of consumers’ money decreases. This means that consumers may have to spend more money to purchase the same amount of goods, which can result in higher prices for everyday products, including paint.

It’s important to note that the relationship between inflation and specific product prices can vary based on the specific circumstances in the market and the overall economic conditions.

Several factors can contribute to paint prices going up during times of high inflation:

Raw Material Costs

Many paints are made from various chemicals and raw materials. If the cost of these materials increases due to inflation, the overall production cost of paint can rise, leading to higher prices for consumers.
Transportation Costs

Inflation can also impact transportation costs, which can affect the price of getting raw materials to paint manufacturers and finished paint products to stores. Higher fuel prices and increased transportation expenses can contribute to price hikes.

Labor Costs
Labor costs can rise during periods of inflation, affecting the wages of workers involved in the production and distribution of paint. Higher wages can lead to higher production costs, which can be passed on to consumers.
Supply Chain Disruptions

Inflation can lead to supply chain disruptions, affecting the availability of raw materials, components, and even packaging. These disruptions can drive up costs for manufacturers, which may be reflected in higher prices for consumers.

Demand and Supply Dynamics
High inflation can impact consumer behavior. People might rush to purchase goods before prices rise further, leading to increased demand. If supply doesn’t match this sudden surge in demand, prices can rise due to the basic principle of supply and demand.

Market Expectations

Inflation can be influenced by market expectations. If consumers and businesses expect prices to rise in the future, they might make purchasing decisions based on these expectations, further contributing to demand-driven price increases.

Exchange Rates

Inflation can also be influenced by currency values in the international market. If a country’s currency is devalued, it can lead to higher import costs for raw materials or finished paint products, which can contribute to price hikes.