India’s retail and FMCG landscape closed the year on a note of cautious recovery, with macro signals turning supportive even as structural tensions persist. Retail inflation rose for the second consecutive month to 1.33% in December, driven by higher food and personal care prices, but remained comfortably below the RBI’s 4% target for an eleventh straight month. This benign inflation backdrop is helping stabilise consumption, particularly in essential categories.
Encouragingly, the FMCG sector reported a volume-led rebound in the December quarter, aided by GST-related normalisation, festive demand and easing input costs. Rural markets once again outperformed urban centres, while e-commerce emerged as a strong incremental growth driver. This recovery is also setting the stage for higher advertising spends in FY26, with FMCG expected to remain the single largest contributor to India’s AdEx cycle.
That said, not all consumption segments are back in form. Goldman Sachs remains cautious on discretionary categories such as fashion, footwear and QSR, even as staples and jewellery show resilience. Meanwhile, India’s 10-minute delivery model is under strain, with rider protests and cost pressures forcing a rethink of speed-at-all-costs economics. As the Union Budget 2026 approaches, attention is shifting to whether policy can convert this early FMCG recovery into a deeper, more durable consumption cycle.
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. India’s retail inflation quickens for second straight month to 1.33% in December
India’s retail inflation quickened to 1.33% in December 2025 on an annual basis, as against 0.71% in November 2025, driven by higher prices in personal care, vegetables, meat and fish, eggs, spices, and pulses and products. This marked the 11th straight month that inflation remained below the Reserve Bank of India’s medium-term target of 4%.
2. Goldman Sachs sees strong FMCG recovery, but stays cautious on discretionary demand
Arnab Mitra, India Consumer Analyst at Goldman Sachs, remains cautious on discretionary sectors, except jewellery, which continues to see strong demand. Low-ticket segments such as QSR, fashion and footwear are still under pressure due to weak demand, intense competition, digital disruption and ongoing earnings downgrades, limiting upside despite high valuations.
3. India’s 10-minute delivery model is under pressure
India's rapid delivery services are under pressure. Over 2,00,000 riders recently went on strike demanding fair pay and an end to the 10-minute delivery promise. This has sparked a debate about the true cost of instant gratification. The industry's rapid growth, fueled by dark stores, is now facing scrutiny.
4. How GST-led FMCG volume rebound could reshape India’s AdEx in FY26
A pick-up in FMCG volumes and operating margins in the December quarter is setting up a more supportive backdrop for advertising spends in India, as large consumer companies signal demand recovery and better profitability after a phase of GST-related channel disruption and weak consumption. FMCG remains the single biggest driver of media demand, and a key swing factor for overall AdEx.
5. FMCG sector rebound: Key players report volume-led growth; rural demand and e-commerce shine
The FMCG sector registered a robust recovery in the December quarter, aided by GST changes, festive sales, and reduced costs of raw materials. Even Dabur, Marico, and Godrej Consumer Products reported volume growth with single-digit revenue growth along with improved operating profit margins. The rural market continued to report better sales than the urban market, along with a sharp increase in e-commerce sales.
6. Can budget 2026 power India’s next FMCG growth cycle?
As India approaches Union Budget 2026, the discourse on economic growth is steadily shifting away from headline GDP numbers towards the depth, durability, and inclusiveness of domestic consumption. At the centre of this transition sits the fast-moving consumer goods (FMCG) sector, widely regarded as the most reliable barometer of everyday economic confidence. From food staples and packaged nutrition to personal care and household essentials, FMCG captures how policy decisions translate into lived consumer behaviour across income groups and geographies.