Retail sales in July 2025 registered an 8% year-on-year growth, sustaining the third consecutive month of steady momentum in the 7–8% range. This marks a clear improvement compared to the slower 3–5% growth seen in the early part of the year. The numbers indicate that consumer confidence is gradually returning, with households beginning to spend more freely on discretionary categories. With the festive and wedding season ahead, retailers are entering the next quarter with cautious optimism, keeping a close watch on whether this pace of recovery continues.
The festive quarter has traditionally served as a barometer for gauging consumer sentiment. In 2024, Retail sales expanded 7% during the October–November period before moderating to 5% in December. Sectors such as food and grocery, jewellery, quick service restaurants, and consumer durables performed strongly, while categories like automobiles and white goods witnessed a slowdown, partly due to buyers postponing purchases in anticipation of tax adjustments. At the same time, inflationary pressures and high EMI commitments weighed on disposable incomes, tempering demand in certain segments.
The festive outlook for Retail sales in 2025 is closely shaped by GST reforms, which are expected to influence purchasing behaviour. The new rate structure, including a simplified two-slab system and the removal of inverted duty in textiles, has been welcomed as a step toward reducing complexity and boosting consumption. Key categories such as food, consumer durables, and IT products are likely to benefit from these changes. However, challenges for Retail sales remain for retailers in specific sectors. Garments and footwear priced above ₹2,500 falling into the 18% slab continue to raise concerns, as do mobile phones still taxed at 18% despite being essential. Additionally, the high GST burden on commercial rentals continues to strain working capital for small and medium-sized retailers.
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