India's consumer goods growth hits 1-1/2-year high on rural revival- NielsenIQ

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10/08/2023 12:13

CHENNAI, Aug 10 (Reuters) - The consumer goods industry
in the world's most populous country clocked its fastest growth
in a year and a half in the April-June quarter, as softening
inflation drove demand even in the hinterlands, according to a
report published on Thursday.
    Demand for consumer goods has been under pressure in rural
India, with higher prices of everyday essentials from milk to
wheat flour forcing people to cut back spending on both other
essentials and discretionary purchases.
    However, inflation eased in April and May, bringing some
relief for consumer goods makers like Maggi instant
noodles-seller Nestle India  NEST.NS .
    In the June quarter, rural markets posted staggered growth,
with sales volumes climbing 4% on demand for staples as well as
non-foods, improving from a 0.3% rise in the previous quarter,
market researcher NielsenIQ said.
    Rural markets volumes had fallen roughly 2%-5% in the
preceding four quarters.
    "(The recovery in the rural markets) combined with a 21%
growth in modern trade augurs well for the upcoming festive
seasons," said Roosevelt D'Souza, lead, customer success, NIQ
India.
    "Modern trade" includes large supermarket chains, while
mom-and-pop stores make up "traditional trade."
    Overall, the value of the consumer goods industry rose 12.2%
in the April-June quarter, improving from a 10.2% growth in the
previous three months and clocking its best quarter in a year
and a half.
    Consumption growth, meanwhile, was at its highest in two
years, helped by price cuts.
    "The reduction in input costs, if continued to be passed on
to consumers, will only increase consumption benefiting all
three - manufacturers, retailers and consumers," D'Souza said.
    However, growth could come under pressure given that India's
retail inflation likely accelerated to 6.40% in July, as per a
Reuters poll, breaching the upper end of the Reserve Bank of
India's 2%-6% tolerance band for the first time in five months.

 (Reporting by Praveen Paramasivam in Chennai; Editing by Savio
D'Souza)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))