FMCG sector flags urban consumption slowdown as food inflation bites

Lower salary increases, high interest rates will continue impacting urban demand, says Nomura

A worrying trend is unfolding in the Indian consumer sector, with fast-moving consumer goods (FMCG) companies reporting a slowdown in urban consumption in the September quarter.

 

While temporary factors, such as a heavy monsoon, have worsened the slowdown, especially for out-of-home consumption, companies say high levels of food inflation remain a key concern for urban consumers.

 

In its second-quarter results released on Wednesday, Dabur India, the maker of Hajmola candy and Real fruit juice, said its rural business continued to outpace urban by 130 basis points (bps) for the third straight quarter. While rural markets grew 1.8 per cent, urban