The latest FMCG Pulse report by Kantar reveals a notable slowdown in the fast-moving consumer goods (FMCG) sector, with growth dropping to 4.3% between August and October 2024. This marks a decline from 6.4% in the same period last year and a slight dip from the 4.5% growth recorded in the previous quarter.
Urban markets, a crucial segment for FMCG products, have experienced a sharp drop in growth, with volume growth falling to 4.5% this quarter from nearly 7% last year. Kantar attributes this deceleration to rising inflation, which has driven up the average cost of FMCG goods, from ₹133 per kilogram to ₹137 per kilogram between the two quarters. This price hike mirrors the inflationary trends seen during early 2022.
Despite this slowdown, household spending on FMCG goods continues to rise, with the average quarterly expenditure per household increasing by 13% over the past two years, reaching ₹6,761. However, the higher prices are limiting the growth in volume.
Rural markets, which typically outperform urban areas in growth, are also facing a slowdown, with volume growth dropping to 4%, slightly behind urban growth. This is partly attributed to government-supplied free grain programs that have affected demand in staple categories like flour.
Kantar’s analysis suggests that unless inflationary pressures ease, significant growth in urban FMCG markets is unlikely in the short term. However, rural markets may see a recovery, driven by government initiatives and agricultural sector growth in the coming year.