-by Jaya Pathak
Inflation in this guise is not playing the textbook way. It was a wait for another half year and a half since many central banks across the globe started easing rates with much of it being done in a cautious manner, only to declare victory in the battle against the post-pandemic price spiral – and here we are, in the mid-2026 quarter, watching input costs creep upward in industries ranging from speciality chemicals to logistics to commercial real estate.
The consumer price index in India and United States may not be flashing red but for anyone reading the fine print on quarterly earnings calls, the margin story is a different story. Costs are sticky. Demand is selective. But the tried and tested strategy of shifting costs on to customers, and hoping for the best, is now riskier than ever.
The troublesome nature of this inflation is that it is 2026. It is far less wide-ranging than the spike in the supply side of the economy caused by the war in 2022. It is picky, narrow, and persistent. Crude oil prices have been bouncing off and on between $78 and $92 a barrel for the first five months of the year and have yet to find a comfortable price range.
Despite a slower hiring growth, wage inflation in India’s white collar services industry – a shock for many mid-cap IT companies – has not reached a level that can be said to have meaningfully changed. Prices of agricultural commodities are driving down the margins of FMCG products, particularly due to the irregularities in the monsoons and geopolitical instability in shipping lanes from the Black Sea. The outcome is one that requires surgical precision and not broad strokes when it comes to pricing.
Consider the divergence playing out in India’s consumer goods space. Hindustan Unilever’s latest quarterly commentary was revealing: volume growth has returned, but only because the company has been remarkably restrained on pricing, choosing to absorb cost pressures through internal efficiencies and portfolio mix shifts rather than headline price increases.
Compare with a few mid-tier FMCG companies, who implemented sharp price increases late 2025 and saw rural volumes dropping in Q1-Q2 2026. It isn’t that price hikes are bad, it’s that indiscriminate, blanket price increases are a luxury that very few brands can afford in a land of plenty filled with more options, more information and less brand loyalty than ever in the recent past.
The smartest operators in this environment have moved away from thinking about pricing as a single lever and toward what might be called pricing architecture – a layered, dynamic system that treats different customer segments, channels, and occasions as distinct pricing theatres. Titan, for instance, has demonstrated a masterclass in this approach across its jewellery and watch portfolios, using occasion-based pricing, financing options, and exchange programmes to maintain transaction values without triggering sticker shock.
The sticker price matters less than the perceived value at the moment of purchase, and companies that understand this distinction are outperforming those fixated on list-price arithmetic.
There is a deeper strategic question embedded here, one that goes beyond tactical pricing moves. Inflation, when it persists at moderate but irritating levels – the kind of 4-to-6 percent range that India has been navigating – forces a reckoning with business model fundamentals. It exposes companies that have been relying on top-line growth to paper over operational inefficiencies.
It punishes businesses with high fixed-cost structures and limited pricing power. And it rewards those that have invested, often unglamorously, in supply chain resilience, vendor diversification, and process automation during the quieter years.
The quick-service restaurant sector offers a fascinating case study. Jubilant FoodWorks, the Domino’s franchisee in India, has been threading the needle between food inflation and value perception with notable skill – shrinking portion geometries slightly, introducing lower-priced entry products, and leaning heavily into its delivery infrastructure to justify convenience premiums.
The company has effectively decoupled its pricing narrative from the raw cost of cheese and wheat flour by reframing what the customer is actually paying for. That reframing – from product pricing to experience pricing – is perhaps the most underappreciated strategic shift available to consumer-facing businesses right now.
In B2B markets, the dynamics are different but no less consequential. Industrial companies and contract manufacturers face a particular bind: their customers are themselves under margin pressure and resist cost pass-throughs with increasing ferocity. The era of annual price escalation clauses being accepted without negotiation is over.
What has emerged instead is a more sophisticated dance around value engineering, specification optimisation, and total-cost-of-ownership arguments. The speciality chemicals companies that are thriving – firms like PI Industries or Navin Fluorine – are those that have moved up the value chain sufficiently to command pricing power through technical differentiation rather than commodity pricing logic.
In categories where demand elasticity is high and switching costs are low – think personal care, packaged foods, entry-level fashion – targeted promotional pricing that drives volume can deliver better absolute margin contribution than holding price and watching volumes erode. The mathematics of fixed-cost absorption still apply.
A factory running at 85 percent utilisation at slightly lower realisations often generates more profit than the same factory running at 70 percent utilisation at higher price points. Too many CFOs remain anchored to the realisation-per-unit metric when the relevant number is profit-per-unit-of-capacity.
What concerns me, observing the current landscape, is the growing temptation among boards and management teams to treat pricing as a substitute for strategy. Raising prices is easy. It requires a boardroom presentation, a revised price list, and a communication to the sales team.
Building genuine pricing power – through brand equity, innovation, customer lock-in, or ecosystem stickiness – is hard, slow, and often invisible to quarterly earnings watchers. Yet it is precisely this kind of structural pricing power that separates companies that emerge stronger from inflationary periods from those that merely survive them.
Adding to the complexity is the Indian market. A market that can swing between a product being viable in rural areas or not, in which products with lower overheads from competitors can easily outcompete national brands, and where digital channels make price comparisons as easy as a click – this market does not tolerate slow pricing.
The firms to come across 2026 will be those who are using pricing as a strategic initiative, investing in analytics, establishing pricing teams, and leveraging pricing as an integral part of the demand planning, procurement and brand strategy process and not as an afterthought to be handed over to the commercial team.
There is a scene from the early days of Infosys that Narayana Murthy has recounted in various forums – about the company’s decision, during a period of rupee appreciation that was squeezing export realisations, to invest aggressively in operational efficiency rather than simply renegotiating rates with clients.
The discipline of treating external cost pressures as an internal innovation trigger, rather than an excuse for customer pass-through, is one that bears revisiting. Not every cost increase deserves to be transferred to the buyer. Some deserve to be engineered out of existence.
