Inflation has been a headwind affecting FMCG consumption severely since the breakout of the pandemic. First, the Russia-Ukraine war, then the Indonesia Palm oil ban, the ship stuck in the Suez Canal and many other out of control globally affecting issues. However, strong local measures started helping the Inflation trend lower, moving up again in August 2022. This has been eating at the purse strings of every Indian, with many altering their consumption patterns and downtrading in the past.
Monsoons are expected to be a tailwind for consumption by helping put income in the hands of rural consumers, who will drive up consumption. However, monsoons this year have been a double-edged sword. We usually wish for all parts to receive a steady & normal amount of rainfall through the season to ensure a normal Kharif crop. However, this year
has seen drought conditions in parts of India (including UP, the number 1 state for FMCG sales this month), during most of the monsoon season (June – September). On the other hand, many parts of the country were also affected by excessive rainfall, thus causing crop damage, which was especially severe in Maharashtra (the number 2 state for FMCG sales this month).
However, none of this has stopped consumers from celebrating festivals with great fervour this time around. Why?
Because while we’ve heard of revenge shopping & revenge travel earlier, this year it does seem like we’re in the throes of Revenge Festivities as we approach Diwali. This is a strong sentiment that could help drive strong sales for this season.
In September 2022, we did see overstocking impacting the placement of products in kiranas during the month. But this could be only a temporary blip.
If we manage to rein in inflationary headwinds a little bit more, we can possibly look to have a great festival season coming up.