indian economy rural markets affected due to food inflation and less rainfall affected fmcg industry mdn

Indian Economy: The July-September quarter was challenging for the FMCG industry amid food inflation and weak consumer demand due to uneven rainfall in some areas and decline in rural consumption. The operating environment for the FMCG industry remains difficult as rural demand remains sluggish. Some positive signs which were visible in the last April-June quarter have come to a halt after the adverse conditions. Major FMCG companies like Hindustan Unilever (HUL), ITC and Nestle expressed concerns over uneven rainfall in the second quarter, impact on crop production and rising prices of some commodities like wheat, flour, sugar, potatoes, coffee, etc. According to a statement issued by ITC, consumption demand has been relatively low due to below normal monsoon and food inflation, especially in the value segment and rural markets. Analysts said persistent inflation has affected rural demand. Rural demand contributes more than one-third to FMCG sales. Nestle India has also indicated adverse impact on pricing due to lack of rain in many parts of the country.

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