.MUMBAI: The war-led volatility in energy markets coupled with the risk of food inflation amid projections of below-normal monsoon rains this year could weigh on FMCG volume growth, Worldpanel by Numerator (formerly Kantar) said in its update on Wednesday. It estimated volume growth to drop to 3-4% if the situation doesn't improve, as an unstable domestic macro-environment may prod consumers to cut back on discretionary spends and reduce shopping trips. "If higher energy costs coincide with food inflation from weather stress, FMCG volume growth could soften....a prolonged move (for crude) towards $100 alters cost structures across logistics, packaging inputs and fertiliser availability," analysts at the firm said, adding that sub-normal rainfall which typically translates into slower rural recovery weighs on food categories and low-ticket discretionary items. The fresh challenge for the sector comes just when FMCG volumes had started picking up, expanding to 5.4% in the March quarter from 3.5% in the year-ago period, helped by GST cuts which made daily household products cheaper. However, with the war sending oil prices above $100 per barrel, companies such as Hindustan Unilever (HUL), Dabur, Godrej Consumer Products and Marico took price hikes in the range of 2-7% to cope with high input costs.. With retail fuel prices seeing two rounds of increases, firms are expected to take more price hikes in the coming months as the move will directly have a bearing on logistics and packaging costs. "Consumers can increase the purchase of smaller packs," K Ramakrishnan, MD, South Asia at Worldpanel by Numerator told TOI. High prices over the past couple of years had already been nudging the middle class to reduce their frequency of grocery shopping and instead spend more per trip. "Price per unit has risen meaningfully across FMCG over the last two years including in staples and mass categories," the firm said. Higher prices pushed up value growth which stood at 13.3% over the past year and 13.1% in March quarter, outpacing volume growth. The current macro scenario "raises the probability that price-led growth extends for longer....in such environments, shoppers do not withdraw consumption drastically, but re-organises it," the firm said, adding that in a benign environment, FMCG volume growth should have moved closer to 5% over the year. Impulse food categories will face reduced (buying) frequency while household care is expected to stand out as the most structurally resilient category.