BENGALURU (Reuters) – India’s consumer goods sector clocked a 9% growth in value in the July-September quarter as spending power improved in the hinterlands, according to a report by NielsenIQ on Tuesday.
Rural markets showed continued recovery during the quarter, with sales volumes rising 6.4% from 4% in the June-quarter, the market research firm said.
Rural market volumes had fallen roughly 2%-5% in the preceding four quarters.
Demand for consumer goods has remained under pressure in rural India, with higher prices of everyday items from milk to wheat flour forcing people to reduce spending on both essentials and discretionary items.
However, slower price increases, a decline in unemployment and the government’s decision to cut cooking gas prices improved consumers’ willingness to spend, said Satish Pillai, Managing Director at NIQ India.
India’s retail inflation rose to a 15-month high in July, but eased in August and September. Unemployment eased in September to 7.1% but rose again in October to over 10%, according to data from the Centre For Monitoring Indian Economy.
An increase in consumer spending on discretionary categories like personal care and home care products suggests that rural consumers are beginning to spend on items beyond essentials, the report said.
“Impulse food categories continue to exhibit strong growth, and we see a growth recovery in habit-forming categories such as biscuits, tea, noodles and coffee after five quarters,” said Roosevelt D’Souza, lead, customer success at NIQ India.
While rural markets showed signs of recovery, urban areas maintained a stable rate of growth in consumption.
Within the retail sector, modern trade grew 19.5% during the quarter, with traditional trade seeing a 7.5% rise in consumption, the report said.
Modern trade includes large supermarket chains, while mom-and-pop stores make up traditional trade.
“This renewed optimism across the country augurs well for the festive season,” D’Souza said.
(Reporting by Kashish Tandon in Bengaluru; Editing by Sonia Cheema)