India, June 27 -- The packaged goods industry is stabilising after a period of soft demand, said Suresh Narayanan, Nestle India's outgoing chairman and managing director, on Thursday. While addressing shareholders at the company's 66th annual general meeting (AGM), Narayanan noted that high food inflation had negatively impacted volumes for fast-moving consumer goods (FMCG) manufacturers. "There has been an overall slowdown in the consumer goods space because of food inflation, evolution of real incomes, unemployment and various other global maladies that have also affected us. Happy to report that things are stabilizing; food inflation clearly impacted our business," he said. He acknowledged that commodity inflation has affected the company's volume-led growth, but expects gradual improvement. Commodities like coffee and cocoa are at elevated levels, at decadal highs, and that clearly puts enormous pressure on managing both penetration-led growth and the company's bottom line. "There have been short-term pressures. But hopefully we will be getting back to the normal stride in the coming quarters.in the coming months," he said during his last virtual AGM. Narayanan is set to retire on 31 July. The company deploys a combination of cost-saving measures, nearly 2% annually, along with buying efficiencies to tide itself over periods of high inflation. "Sadly, we have had to make quite a few price increases. That clearly has a short-term impact on volumes. Going forward, we would not like to use price increases wherever we can," he said.Nestle sells a range of products in India, including chocolates, milk, ketchup, cooking aids, infant nutrition, cereals, curd, noodles, coffee, and pet food. Higher prices for key raw materials like coffee, milk, and cocoa directly impact the company's margins. For instance, in the fourth quarter of the last fiscal year, average prices for Arabica coffee were up 97%, while Robusta prices rose 65% year-on-year. Narayanan said high prices and Nestle's price hikes impacted the milk and nutrition category, which accounts for 37.9% of its total sales. The company sells packaged milk, yoghurt, and ready-to-drink coffee. "Overall, food inflation has been quite significant. That obviously has led to strained price lines as far as some of our brands are concerned. We have therefore looked at a series of cost-saving and efficiency initiatives, and only after that, initiated any price increases in a responsible manner to ensure category growth remains. The impact certainly is coming down," he added. He also noted that the divestment of the healthcare business to Dr Reddy's Laboratories Ltd will partly reflect in the category's performance. To be sure, several large packaged consumer companies have been pointing to a stress in urban consumption over the last few quarters. The Indian FMCG industry reported 11% on-year value growth in the March quarter, driven by a 5.1% volume increase and a 5.6% price hike, according to data released by NielsenIQ....