FMCG companies are expected to show mid single-digit volume growth in the December quarter. The growth is driven by a gradual recovery in rural consumption that is outpacing urban demand. Rural growth has been supported by good rainfal.In contrast, urban demand remains weak due to inflation, low wage growth, and high housing costs.

The urban slow down is estimated to last for 2 -3 quarters. This trend continues from previous quarters, where rural growth was twice as fast as urban growth, as shown by NielsenIQ data. Inflationary pressures are likely to adversely impact margins of leading FMCG firms in the December quarter.