FMCG Giants Feel Household Budget Pinch

India's FMCG Giants Face A Cautious Consumer Mood Shift

By Katya Naidu

What? 

Indian household budgets have been stress-tested many times over in the last few months, because of which they’re now becoming more careful about where and how they spend. Rising LPG prices, higher fuel costs and persistent inflation are beginning to reshape consumption patterns, creating a new challenge for FMCG companies already grappling with rising input costs.

Even as supply-side worries around LPG have eased, households remain under pressure. LPG prices rose sharply by Rs 89 per cylinder, followed by increases in diesel and petrol prices, further tightening household budgets. 

The sector, directly linked to everyday spending, is expected to see slower growth amid inflationary pressures and the looming threat of El Niño.

The El Niño phenomenon is marked by unusually warm surface waters in the Pacific Ocean. This temperature spike causes trade winds to weaken or change direction, which ultimately disrupts rainfall patterns across Southeast Asia.

Indian households have increasingly shifted to batch-cooking, skipping a few cooking occasions, and cutting down on snacks or special dishes prepared at home, a Worldpanel by Numerator survey found. 

“Notably, eating out or ordering in does not get a meaningful boost, which is a clear indication that the response to LPG stress is not aspirational substitution, but constrained optimisation – doing less with less, within the home,” the Worldpanel report said. 

Why Does It Matter 

The moderation in spending appears sharper in categories that consumers can defer.

The chocolates and confectionery segment, for example, grew only 0.9% in the January-March quarter of 2026 compared with 9.2% a year earlier. Growth improved to 5% in April but moderated to 4.1% in May. Home care, meanwhile, contracted by 6.5% and 3.7% in April and May, respectively, according to Bizom data.

These trends are beginning to affect distribution channels as well.

“Overall, kiranas appeared more cautious towards the end of the quarter, prioritising high-rotation and essential categories while limiting exposure to slower-moving discretionary segments,” said a Bizom JFM quarterly report.

FMCG companies are simultaneously dealing with rising cost pressures. Like households, their challenges are broad-based. A weaker rupee has increased the landed cost of imported products such as packaging materials, chemicals, fragrances and edible oil derivatives.

Higher crude oil prices have increased freight, packaging and energy-linked costs, while edible oil volatility has affected categories including packaged foods, bakery products, snacks, soaps and personal care.

“Industry data indicates that large FMCG companies have already implemented price increases of around 4–5%, while also reducing pack sizes in select categories to protect important Rs 10 and Rs 20 price points. The risk is clear. If companies over-index on price hikes, volumes may weaken. If they over-index on grammage reduction, consumers may experience shrinkflation fatigue,” Avinash Chandani, partner at Deloitte India, told The Core.

Shrinkflation refers to companies reducing the quantity of products in a packet while keeping prices unchanged.

Despite the double-edged pressures of rising costs and lower spending power, India is not yet in the throes of a consumption slowdown but an “affordability re-architecture”, Chandani believes.

“Indian households are still consuming, but they are becoming far more deliberate about what they buy, where they buy it, how frequently they buy it, which pack size they choose, and which occasions they are willing to spend on,” he added.

When Did Your Business Start Running You?

What started as ownership turned into obligation.

Now you’re in every meeting, decision, and channel… not because you want to be, but because things stall without you.

It’s not a capacity issue. It’s a structure issue.

The Freedom Framework shows you how to rebuild work flows, so you can step back without things breaking down.

BELAY U.S.-based Assistants help make that real by bringing ownership to execution, so your business doesn’t rely on you to function.

Download The Freedom Framework for Free

57.4

That's HSBC's flash India Composite Purchasing Managers' Index (PMI), which reflects India’s private sector growth compiled by S&P Global for June, down from May's 59.3.

Context: A PMI reading above 50.0 signals expansion, so India's private sector is still growing but at its slowest pace in three months. The services PMI slid to a 17-month low of 57.3 (from 59.8), while manufacturing eased to a three-month low of 54.5 (from 55.0).

Overall, new orders, the key demand gauge, grew at their weakest pace since March, with firms citing competitive pressures and gas shortages. Exports were mixed, with services seeing slightly faster international sales growth, while manufacturers posted their weakest rise in new export orders since March 2023.

This survey-based softness lines up with India's eight core infrastructure sectors, which make up 40.27% of the IIP, growing just 0.5% in May, a seven-month low, down from 1.8% in April.

How We Got Here: Softer demand is persistent through hiring and pricing. Employment rose only marginally in June, the weakest in the current six-month expansion streak. Cost pressures eased for a third straight month to their lowest since January, and business confidence slipped below its long-run average, with sentiment among goods producers at its weakest in nearly four years.

Trump Jr’s Undisclosed Adani Meeting

Billionaire Gautam Adani reportedly met businessman and US President’s son Donald Trump Jr in an undisclosed meeting in Ahmedabad last November, as the billionaire's lawyers were working to kill his federal bribery indictment, and as Adani tripled his US investment pledge to $30 billion, according to a Bloomberg exclusive.

Context: The meeting, during a trip Trump Jr. took for a wedding and wildlife tour, came roughly a year after the Department of Justice (DOJ) accused Adani and his nephew Sagar of a $250 million bribery scheme in India.

Adani's younger son, Jeet Adani, separately met Trump Jr. at Mar-a-Lago last year. A person close to Trump Jr said the case never came up in either meeting; a spokesperson said: "Don had zero to do with DOJ's actions."

In May, the DOJ moved to drop the charges, days after Adani and Sagar paid $18 million to settle an SEC fraud case, and Adani Enterprises paid $275 million to resolve a Treasury sanctions probe, both without admitting wrongdoing.

Why now: Senators Elizabeth Warren and Richard Blumenthal are pressing the DOJ on whether Adani's investment pledge swayed the decision. The DOJ denies it, while Adani's net worth has since rebounded to $120.3 billion.

Telegram Under Fresh Scrutiny

Telegram has come under fresh scrutiny in India after the Home Ministry's cybercrime watchdog, the Indian Cybercrime Coordination Centre (I4C), alleged in a court submission that the platform was being used to share child sexual abuse material and perpetrate cyber fraud, Reuters reported.

The findings formed part of the government's defence of a week-long ban imposed after the National Eligibility cum Entrance Test - Undergraduate (NEET-UG), a major medical entrance exam paper, was allegedly leaked through the messaging platform.

Overview: The government’s report said Telegram's privacy features, including allowing users to interact without revealing phone numbers, make identity detection difficult and are being exploited by cybercriminals.

Setup: India has received more than 6.88 lakh complaints since 2023 alleging Telegram was used for cyber fraud, resulting in estimated losses of $750 million, according to the report.

Trade Deal Talks Advance

The United States (US) is focused on securing a fair and reciprocal trade deal with India that expands market access for American exporters and benefits both countries, the US Embassy in India said on Tuesday. The remarks come a day after the Commerce and Industry Minister Piyush Goyal said India is seeking a tariff advantage over competing Asian economies.

US Trade Representative Jamieson Greer met Goyal in New Delhi as the two sides stepped up efforts to conclude an interim trade agreement.

Fast Facts: The talks come amid uncertainty over the implementation of a trade framework announced in February after the US Supreme Court struck down President Donald Trump's global tariff regime. India has reportedly sought the closure of ongoing US Section 301 investigations and wants assurances against future tariff actions.

Setting: Despite the outstanding issues, both sides are pushing to finalise a deal following last week's meeting between Prime Minister Narendra Modi and Trump.

Bank Deposit Mix Shifts

India's banking sector deposits rose 13.5% year-on-year to about Rs 262 trillion in FY26, supported by liquidity measures and tax-related benefits. However, credit growth continued to outpace deposit mobilisation, keeping the system-level credit-deposit ratio above 81%, according to a Crisil Intelligence report.

Fast Facts: Deposit composition continued to shift towards term deposits, whose share rose to 61% from 58% in FY19, while the current and savings accounts (CASA) ratio fell to 39% from 42%.

Household deposits remained the largest funding source, but their share declined, reflecting growing allocation of savings to alternative investment avenues and increasing participation by institutional depositors.

Future: Banks are expected to focus on rural and semi-urban markets, where CASA ratios remain significantly higher than in metropolitan centres.

Your creative brief is due Friday. Viktor wrote it Tuesday.

Tell him the campaign. Viktor pulls last quarter's performance from Meta and TikTok, scrapes competitor ads, drafts the brief, posts it for review. You edit, he ships the creative requests to your designer. Inside Slack.

Get Started for Free

Did A Big IPO Break The Market Just Now?

On Episode 909 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Srivastava, Founder at the Global Trade Research Initiative (GTRI) as well as Deepak Ballani, Director General at the Indian Sugar and Bio-Energy Manufacturers Association (ISMA).

• Did A Big IPO Break The Market Just Now?

• Oil Prices Continue To Slide Downwards As Talks Progress

• India’s Banking Sector Saw Higher Credit Growth Than Deposit Growth In Fiscal 2026

• What Are The Real Options Ahead Of India On The US-India Trade Deal?

• Results Of A IIT-Delhi Led Study On Flex Fuel Compatibility For Ethanol Fuel Is Out. What Does It Say?