Consumer staples can be defined as the household necessities or the common goods that are used in the house on regular basis. These products are used in the house on daily basis and people continue to use these things irrespective of their overall price or the economy.
Example of Consumer Staples
There are a number of consumer staples such as beverages, tobacco, drugs, medicines, food items and common household things. Consumer Staples are the things whom prices are not reduced even in the toughest economic times or in the recession. These are the things that fulfill basic needs of the people so they had to purchase these things for sure whether they are offered at a high price or a low one. Consumers see a constant level of demand because people go through these things in their routine.
Importance of Consumer Staples
The demand of consumer staples remains fairly constant whether it is measured in the year in or the year out. The portion of the income of the consumer that is used to purchase the consumer staples is relatively a low part of annual income so the demand of the consumer staples remain steady. This means that the sales and earnings of the consumer staple remain balanced throughout the year. For example no one cut off the purchase of eggs or the dish wash liquids or baby shampoo even if the recession has struck the country. This means with the help of consumer staples investors can hedge the risk of losing money by making consumer staple as a part of their investment portfolio.
Other Related Accounting Articles: