Retail sales in July 2025 grew 8% year-on-year, marking the third consecutive month of 7-8% growth. This steady recovery from the 3-5% levels seen earlier in the year signals that consumers are slowly but surely opening their wallets for discretionary products. As we step into the festive and wedding season, retailers are cautiously optimistic. Much will depend on whether this momentum sustains over the coming months.
The festive quarter has always been the barometer of consumer sentiment. In 2024, we saw sales grow 7% during October-November and moderate to 5% in December. Categories such as food and grocery, QSR, jewellery, and consumer durables led the way, while automobiles and white goods slowed as customers waited for tax changes. Inflation and EMI obligations also added pressure on household budgets, shaping a more measured demand.
This year, the festive outlook is closely tied to GST reform. The new rates are favourable for consumption in most categories, including food, CDIT, and others. The introduction of a simpler two-slab structure and the removal of inverted duty in textiles are positive moves that bring clarity. At the same time, concerns remain around garments and footwear above ₹2,500 being placed under the 18% slab, mobile phones continuing at 18% despite being essential goods, and high GST on commercial rentals that strain working capital for lakhs of small and medium retailers.