2 days ago
India’s Consumer Demand Holds Up Despite Inflation and Conflict
People in India are still buying everyday products even though some costs have gone up.
Companies faced higher expenses for packaging, shipping and ingredients because of the conflict in West Asia.
Instead of raising all prices sharply, many companies increased prices a little or put less product in some packages.
Sales of air conditioners, refrigerators and washing machines also grew strongly.
Rural shoppers continued to buy more, while city shoppers used quick-commerce services and bought more premium products.
Heat waves helped increase air-conditioner sales.
Businesses say Indian consumers are looking for convenience, better technology and good overall value.
However, a longer war or a weak monsoon could make people spend less later in 2026.
Overall FMCG value growth rose to 6.8% in Q1 FY27 from 3.6% in Q4 FY26, though it remained below 7.3% a year earlier.
FMCG raw-material costs increased by 8-10% due to higher crude-linked packaging, edible oils and palm oil costs.
Air-conditioner sales grew 20-25% year-on-year from March to June, while refrigerator and washing-machine sales rose 10-12% and 8-10%, respectively.
Rural FMCG demand at Dabur India grew 6.2%, exceeding urban growth of 4.6%, while companies used price increases and smaller packs to manage inflation.
FMCG volume growth could slow to 4% by the end of 2026 if the Iran war worsens and the monsoon is weak.
- Who
- Indian consumers, FMCG companies and consumer-durable manufacturers, including Dabur India, LG Electronics India and Voltas.
- What
- Consumer demand for FMCG products and major white goods remained resilient despite inflation, higher input costs and geopolitical disruption.
- Where
- India, including rural areas, urban markets and tier 2 and tier 3 cities.
- When
- During Q4 FY26 and Q1 FY27, particularly from March through June; the risk outlook extends to the end of calendar 2026.
- Why
- Companies managed higher costs through selective price increases, smaller grammages, promotions, premium products, efficiency measures and supply-chain adjustments.
Resilience View
Risk View
Current consumer demand
Resilience View
Companies and industry executives say demand has held up, with FMCG value growth recovering sequentially and white-goods sales recording strong gains.
Risk View
FMCG growth in Q1 FY27 was still below the 7.3% recorded a year earlier, and reported value growth does not show volume growth.
How inflation is being managed
Resilience View
Selective price increases, smaller pack sizes, promotions, premiumisation and cost controls have helped protect consumer demand and entry price points.
Risk View
Higher input costs may continue to pressure consumers, especially as companies absorb only part of the inflation through efficiency measures and limited price increases.
Future outlook
Resilience View
Rural consumption is broadening, urban demand is nearly catching up, and consumers are increasingly prioritising technology, convenience and overall value.
Risk View
Worldpanel by Numerator warned that volume growth could fall to 4% by the end of 2026 if the Iran war intensifies and August-September monsoon conditions are weak.
Key facts
- FMCG value growth
- 6.8% in Q1 FY27, compared with 3.6% in Q4 FY26 and 7.3% in the same quarter a year earlier.
- FMCG volume growth
- Worldpanel by Numerator estimated recent volume growth at 4.5-5%.
- Raw-material inflation
- Costs for several FMCG companies rose 8-10%, driven by crude-linked packaging, edible oils and palm oil.
- Air-conditioner sales
- Sales grew 20-25% year-on-year between March and June.
- Other white goods
- Refrigerator sales grew about 10-12%, while washing-machine sales grew about 8-10% during the same period.
- Dabur rural growth
- Rural demand grew 6.2% in the June quarter, compared with 4.6% in urban markets.
- Potential 2026 slowdown
- Numerator said FMCG volume growth could moderate to 4% by the end of 2026 if the Iran war deepens and the monsoon is weak.
Quotes
K Ramakrishnan
Managing Director – South Asia at Worldpanel by Numerator
“FMCG (volume) growth has remained at 4.5-5% in recent quarters, even as some listed companies reported stronger-than-expected results for the June quarter.”
financialexpress.com
“Consumer demand has been holding up amid geopolitical disruptions and packaging inflation”
financialexpress.com
Saugata Gupta
Managing director and chief executive of Marico
“Despite disruption and inflation, Indian consumers have remained relatively insulated compared to several other emerging markets”
financialexpress.com
Sources
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