The Goods and Services Tax reforms, announced on September 22 gave a much needed push to consumer demand, as sales volumes for household essentials and groceries rose sharply in the October-December quarter, as compared to a year earlier.According to executives citing NielsenIQ data and internal company numbers, volumes expanded by around 9–10% in the December quarter, up from 7.1% in the same period last year. This marked the first full quarter after GST rates were reduced on a range of items from September 22, and the data suggests the move helped to revive the inflation-led slowdown that had crippled consumption for multiple quarters, ET reported.The increase in volume growth suggests that more products were sold across a range of categories such as soaps, detergents, snacks and noodles, despite trade disruption and restocking challenges. “The first quarter (after) GST reforms clearly shows volume growth and a further narrowing of the urban-rural gap,” said Mayank Shah, vice-president at Parle Products.“We expect the momentum to continue over the next two quarters, with a clear focus on premiumisation,” Shah told ET. However, though volumes strengthened, value growth remained muted due to widespread price cuts across fast-moving consumer goods. By value, FMCG sales rose 10–11% during the December quarter, broadly flat as compared with 10.6% growth a year earlier, data cited by ET showed.The revised GST structure brought down tax rates on everyday essentials such as soaps, shampoos, toothpaste and food products to 5%, from earlier slabs of 12% or 18%. However, the transition was not swift! Many companies saw their supplies shrinking temporarily as distributors and retailers avoided tying up working capital by placing orders and seeking credit adjustments for price differences, ET reported.Wipro Consumer Care and Lighting, which owns brands such as Santoor and Yardley, attributed the uptick in demand to a combination of factors building over time. “There are income tax benefits which still exist in the system,” said chief executive Vineet Agarwal. “Commodity prices, including crude oil, are now cooling. All of this is clearly positive. The monsoon has been good, which adds to the overall picture. So, the direction is encouraging.”Demand in urban markets had begun to weaken from the middle of last year as rising fuel and commodity costs squeezed household budgets. At the same time, established consumer goods companies, from noodle makers to detergent manufacturers, have faced intensifying competition from regional and digital-first brands.Even so, industry leaders remain optimistic about upcoming months. “The outlook is quite positive,” Sudhir Sitapati, managing director at Godrej Consumer Products told ET. “GDP growth seems good, and all the factors for consumption growth are in place. I am expecting the demand outlook to be good on the back of both GST and income tax reduction. There is more money in consumers’ hands, so hopefully that will drive growth.”In the previous quarter, a majority of listed FMCG companies expected the second half of FY26 to deliver volume-led growth as supply chains normalise.Earlier data from NielsenIQ also highlighted a shift in demand patterns. In its July–September update, the research firm noted that rural markets had outpaced urban areas by volume growth for seven straight quarters, although the gap narrowed as cities showed signs of recovery.Rural volumes grew 7.7% in the September quarter, compared with 3.7% growth in urban markets.
