Festive Retail Sales Outlook: Growth Driven by GST Reforms

Retail sales in July 2025 recorded an 8% year-on-year growth, continuing a positive trend for the third straight month with sales rising consistently in the 7-8% range. This marks a steady recovery compared to the 3-5% growth seen earlier this year and indicates that consumers are gradually increasing discretionary spending. As India approaches the festive and wedding season, retailers are cautiously optimistic but acknowledge that the coming months will determine whether this momentum continues.

The festive quarter has traditionally been a strong indicator of consumer confidence. In 2024, sales during October–November grew by 7%, before moderating to 5% in December. Categories such as food and grocery, QSR (quick service restaurants), jewellery, and consumer durables performed well, while automobiles and white goods saw slower demand as buyers delayed purchases awaiting tax reforms. Household budgets remained under strain due to inflation and EMI commitments, resulting in more cautious consumption.

For 2025, the festive outlook is closely linked to GST reform. The revised GST rates are expected to benefit consumption across key categories, including food and CDIT (Consumer Durables, IT products), with the two-slab tax structure and elimination of inverted duty in textiles seen as positive developments. However, concerns persist regarding garments and footwear priced above ₹2,500 being placed in the 18% slab, mobile phones continuing at 18% despite being essential goods, and the high GST on commercial rentals which impacts cash flow for small and medium-sized retailers.