In its quarterly report on Thursday, market researcher Nielsen said that rural household consumption in India was at a 7-year low in the July-September period.
Falling crop prices have led to a fall in income for households dependent on agriculture, causing a slump in demand for consumer goods.
In the September quarter consumption in rural India grew at 5 percent, which is significantly slower than the 20 percent growth reported a year ago. In the urban areas, growth was seen at 8 percent when compared to 14 percent in the same period of the previous year.
It is the first time in 7 years that consumption in the rural sector has grown slower than the urban areas.
Overall, consumption volumes have grown 3.9 percent in the September quarter as against 13.2 percent a year ago. Rural India makes for 36 percent to overall FMCG (fast-moving consumer goods) spends and had been growing around three-five percentage points faster than urban.
As per projections made by Nielsen, FMCG sector growth in the October-December quarter could range in the 6.5-7.5 percent, which is lower than the 7.6 percent growth seen in the second quarter.
Annual growth forecast for the year 2019 for the sector was retained at 9-10 percent.
In the last quarter, Nielsen had cut its growth forecast for the FMCG market from the earlier forecast of 11-12 percent.
Sectoral index Nifty FMCG opened lower at 31,313.05 before recovery. Shares of Hindustan Unilever Limited also opened lower at Rs 2,100 and later rose by 0.34 percent to an intraday high of Rs 2,110.90.