Relenting inflation and a good monsoon have spurred faster rural demand in India in the April–June quarter of 2025, yet again outpacing urban consumption growth, according to a fresh report.
NielsenIQ, a global research company, said rural markets and small manufacturers were major drivers of growth in the packaged consumer goods category during Q2 2025.
Rural consumption grew at twice the rate of urban intake, while even though cities — especially smaller towns — continued to demonstrate recovery signals.
The report also underlined a significant increase in e-commerce sales, driven by higher shopper penetration and increased spending, particularly on home and personal care (HPC) products. The HPC category kept posting quicker volume growth than food segments, while smaller players beat overall FMCG consumption trends.
Given that inflation is moderating and monsoon conditions look positive, consumption prospects are looking good," said Sharang Pant, customer success director for FMCG, NielsenIQ. He explained that while urban recovery is speeding up, rural markets continue to be the leading driver of volume growth.".
Industry data revealed that FMCG value sales during Q2 2025 increased by 13.9% from the same quarter a year ago, higher than the 11% in growth during the January–March period. In Q1 2025, the industry's 11% year-over-year expansion was supported by a 5.1% growth in volumes and a 5.6% increase in prices. A more significant growth in unit sales than in volume reflected a change in consumer behavior towards pack sizes being smaller.
"Interestingly, the small players are making more inroads based on a low base and shifting market dynamics, although their long-term momentum is yet to be seen," commented Roosevelt Dsouza, APAC Head of Customer Success – FMCG at NielsenIQ India.
Reserve Bank of India (RBI) has also cited solid rural demand as a major driving force behind private consumption. Governor Sanjay Malhotra, after last week's Monetary Policy Committee meeting, stated: "The above normal southwest monsoon, softening inflation, improving capacity utilization and favorable financial conditions are continuing to underpin domestic economic activity. The accommodative monetary, regulatory and fiscal policies including strong government capital expenditure should also support demand."
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