The year-on-year (YoY) growth in India’s consumption demand was quite robust in Q1 FY2027, as reflected in an acceleration in sales growth across most discretionary and non-discretionary categories relative to Q4 FY2026, including fast-moving consumer goods (FMCG), quick service restaurants (QSR), alcoholic beverages, fashion retail, passenger vehicles (PVs) and some home improvement segments (paints and tiles). Additionally, premium hotel occupancy levels were higher in Q1 FY2027 compared to the year ago levels, and while volume growth across some segments such as twowheelers (2Ws) and food delivery slowed relative to Q4 FY2026, it remained strong in the quarter. Although the uptick in sales growth across some segments may have been partly driven by a passthrough of higher input costs owing to the West Asia conflict, consumer demand is expected to have remained healthy, in contrast with the continued moderation in consumer sentiments in urban and rural areas from March 2026 through July 2026. In ICRA’s view, while commodity prices hardened, the impact was partly absorbed by the Government (through lower excise duty) and consumer companies resulting in some impact on the margins of the latter. The uptick in a stricter measure of core CPI inflation was modest, thereby protecting demand.

EXHIBIT: Urban sentiments dipped for the fourth consecutive round in July 2026, with the CSI falling to 88.3 from 90.7 in May; while 1Y ahead outlook is positive, the FEI also eased in July 2026

Survey conducted in 19 major cities; Source: RBI; ICRA Research