The GST rate cuts and festive demand bolstered India’s consumption growth in Q3 FY2026, with the year-on-year (YoY) expansion in real Private Final Consumption Expenditure (PFCE) rising to 8.7% in Q3 FY2026 from 8.0% in Q2 FY2026, even as that in nominal terms weakened. Rural demand was firm in the quarter, while urban demand continued to recover, aided by the 7-quarter high growth in salaries and wages of listed corporates. The trend was broad based across several consumption categories. The revenue growth of fast-moving consumer goods (FMCG), Quick Service Restaurant (QSR) and alcobev companies in the listed space witnessed an acceleration in Q3 FY2026 compared to Q2. Moreover, the retail volumes of the automobile sector registered a double-digit expansion in Q3 FY2026. Besides, festive demand and elevated gold prices boosted sales growth of jewellery companies. Looking ahead, while demand is likely to cool in Q4 FY2026 after the festive season, the positive impact of GST rate cuts has sustained in some sectors such as automobiles. Nevertheless, the ongoing conflict in West Asia and rise in fuel prices may weigh on consumption and GDP growth in the near term.

• FMCG sales growth improved in Q3 FY2026, after easing in each of the prior two quarters, backed by strong festive demand and GST rate cuts.
• Among durables, registrations across PV, 2Ws and tractor segments witnessed double-digit YoY growth in Q3 FY2026, up from levels seen in Q2, boosted by GST rate cuts across segments and attractive discounts.
• Pan-India premium hotel occupancy rebounded quickly to strong levels in Q3 FY2026, after a weak trend in H1, while domestic air passenger traffic reversed to a modest growth in Q3 FY2026.