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Heading towards a slowdown amid inflationary pressures, the FMCG industry‘s volume growth during August-October this year has dropped to 4.3% from 6.4% in the year-ago period, research and insight firm Kantar said in a report.

Moreover, the FMCG volume growth was lower sequentially also as in the May-July period, this was 4.5%, according to Kantar’s latest FMCG Pulse report.

“We are in that last quarter, and the FMCG growth as of the quarter ending October is 4.3%. This number is a far cry from the 6.4% growth seen in Q/E Oct ’23, but is also a tad lower than 4.5% we saw in the last quarter, i.e. Q/E Jul ’24,” it said.

Volume growth in the urban market was at 4.5% in the August-October period, down from 6.9% in the same period of 2023.

However, the report added: “It is also true that a 4.5% growth following a near 7% growth in the previous term is extremely rare. In fact, over the last five years, this has only happened in the quarters of 2024.”

Therefore, technically urban is in a slowdown, though “it is far from a slump”.

About the inflation, the report said that per-household average quarterly spending crossed Rs 6,000 for the first time in the August-October period of 2022, and two years since then, spending has seen a 13% jump and is at Rs 6,761 during this quarter.

In May-July 2024, shoppers were paying Rs 133 per KG of FMCG on average. Just one quarter since then, shoppers are paying Rs 137 per KG, a jump of Rs 4 per KG in the latest August-October period.

“In recent years, this kind of growth in a single consecutive quarter was only seen during the initial months of the 2022 inflation period,” it said.

With no signs of food inflation relenting in the immediate future, where value growth rapidly draws away from volume growth for some more time, it’s hard to see urban (market) growing more rapidly than the current levels.

“We are expecting similar levels of growth to continue into the first half of the next year,” it said.

About the rural market, Kantar said it also seemed “underperforming” with just 4% growth, which is even slower than the 4.5% growth of the urban market in the August-October period.

However, it also added this was led by the mega category, wheat flour (atta).

“Non-atta rural FMCG growth is stable linearly and is growing seasonally,” it said.

Personal care categories have seen a strong jump from 2.8% to 5.4% in August-October, 2024, compared to a year ago. This is a good indicator of a positive market, and the extent of growth here gives us more confidence on the rural market, it added.

“Rural also has seen a near 11% CFPI (food price inflation), and this has resulted in a similar value growth differential here,” it said.

There are some concerns over rainfall for the rabi season, but a major stress is not expected, it said.