New Delhi, Aug 14 Easing inflation and favourable monsoon boosted rural demand in India in the April-June period this year, outpacing urban consumption once again, according to a new report.
According to the report by global research firm NielsenIQ, rural markets and small manufacturers propelled the packaged consumer goods sector in Q2 2025.
Rural markets grew twice as fast as cities, as urban areas showed signs of recovery, particularly in smaller towns.
According to the report, e-commerce also rose significantly, led by increased shopper penetration and spending, especially in home and personal care.
Home and personal care (HPC) volume growth continues to grow faster than food categories and small players are expanding faster than FMCG consumption.
Sharang Pant, head of FMCG customer success at NielsenIQ, said that with inflation easing and a favourable monsoon forecast, the outlook for consumption remains optimistic.
While urban recovery is gaining traction, particularly in smaller towns, rural demand remains the cornerstone of volume expansion, he added.
Sales in Q2 2025 grew 13.9 per cent by value from a year earlier, up from 11 per cent in the previous quarter.
In Q1 2025 (January-March period), the Indian FMCG industry achieved a 11 percent year-on-year growth. Consumption-driven demand was attributed to a 5.1 per cent rise in volume with a 5.6 per cent increase in prices.
A higher unit growth than volume growth indicates preference shift towards smaller packs in consumers.
“Interestingly, small players are gaining more ground due to a low base and changing market dynamics, though their long-term momentum remains to be seen,” Roosevelt Dsouza, APAC Head of Customer Success – FMCG, NielsenIQ India, had said.
According to the Reserve Bank of India (RBI), private consumption, aided by rural demand, and fixed investment, supported by buoyant government capex, continue to boost economic activity.
“The above normal southwest monsoon, lower inflation, rising capacity utilisation and congenial financial conditions continue to support domestic economic activity. The supportive monetary, regulatory and fiscal policies including robust government capital expenditure should also boost demand,” said RBI Governor Sanjay Malhotra after the MPC meeting last week.
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