Ingredients suppliers have passed on the rising cost of oil to finished goods manufacturers who have been forced to absorb the higher costs rather than pass them on to the beauty consumer because of the competitive state of the market.

Oil prices peaked at the end of last year at over $100 a barrel pushing up the cost of petrochemical ingredients along with energy and transportation costs.

While the price of oil is on the descent, dropping to less than $88 a barrel this week, the impact of sustained high prices is being felt in the cosmetics industry.

Rohm and Haas announced today that it was increasing the prices of its personal care polymers and preservatives by between 5 and 10 percent.

The Philadelphia-based company cited rising raw material, freight and energy costs as the reasons for the price hike.

Finished goods manufacturers are feeling the effect of price increases such as these on the bottom line of their profit and loss accounts.

Both Colgate-Palmolive and Kimberly-Clark mentioned high oil prices as a factor that had a negative impact on their profits in recent financial statements.

Japanese-based Kao today recorded a reduction of 7 in operating profits for the first nine months of 2007.

The cosmetics manufacturer attributed the fall to the increased costs of petrochemical, natural oils and fats used in its formulations.

Indeed the rising price of oil is not the only item to be affecting the cost of raw materials with the prices of a number of natural ingredients rising over the last year.

Notably palm oil, which is an increasingly popular ingredient in personal care products, has undergone a series of price increases over the past year.

While ingredients suppliers have been able to increase their prices, competition is so fierce in the market for finished goods that cosmetics firms have been forced to absorb the increased cost of ingredients.

Certain companies have seen their profits slide as a result.

It remains to be seen whether the current fall in oil prices will be sustained but if they do cosmetics companies could see the current trend of rising costs reversed.