New Delhi: Consumption in rural India fell to a seven-year low in the September quarter, growing at a slower pace than that witnessed in urban areas, in a sign that prolonged agrarian distress, uneven rainfall spread, and stagnant rural incomes have hit sales of branded packaged goods, market researcher Nielsen said in its quarterly report on Thursday.

The slowdown was more pronounced in northern India, said Nielsen.

Rural India contributes 36% to overall FMCG spends and has historically been growing 3-5% points faster than urban. This was the first time in seven years that consumption growth in rural areas was slower compared with that of urban markets.

In July-September, rural consumption grew at 5% compared with a 20% growth it clocked in Q3 of 2018. Nielsen said urban India grew at a better pace with an 8% expansion against 14% growth in Q3 of 2018. "…in recent periods, rural growth is slowing down at a much faster rate compared to urban," Nielsen's report on Q3 FMCG growth snapshot said.

The overall FMCG market clocked a value growth of 7.3% in Q3 of 2019 compared with a 16.2% growth in Q3 of 2018.

Notwithstanding the slowdown, Nielsen has retained its annual growth forecast for 2019 for the FMCG market at 9-10%. In the last quarter, it had revised lower its earlier growth forecast of 11-12%.

Analysts at Nielsen have warned that demand could cool further in the October-December quarter, before seeing an uptick starting January.

Nielsen follows a January to December financial year and tracks branded fast moving consumer goods in 86 categories across urban and rural India.

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