India's retail sector demonstrated strong recovery momentum in July 2026, with retail sales growing 8% year-on-year according to the Retailers Association of India's (RAI) Business Survey Round 73. This growth comes weeks after RAI's SANKET report showed genuine store-level demand recovering to 7.1% growth in July, marking the strongest month since the quarter began. As per RAI Executive Director Kumar Rajagopalan, July gave us two confirmations at once: topline growth held up, and genuine store-level demand, which had softened through the summer, came back with it. The recovery positions retailers optimistically for the upcoming festive season, with the base they're working from now stronger than it was in April or May.
Growth patterns varied significantly across regions in July 2026, with the North and South posting 9% growth, the strongest in the survey, while the West and East grew more moderately at 6% each. According to the RAI survey, categories that called for more deliberation grew more slowly, with furniture posting just 1% growth, the weakest in the survey, sports goods growing 4%, jewellery growing 6%, and consumer durables & electronics growing 7%. The regional spread echoes what SANKET found at the store level, with the South holding up strongest through the quarter while the West saw the sharpest swing, dropping furthest in Q1 before rebounding hardest in July.
The Reserve Bank of India's latest monthly bulletin has confirmed India's robust economic performance, highlighting the country's resilience despite global challenges. According to the RBI's 'State of the Economy' report, India's economy continues to display strength characterized by buoyant domestic demand, rising manufacturing and services activity, and strong trade performance. RBI officials noted that India's robust macroeconomic fundamentals continue to provide cushion to the domestic economy despite headwinds from geopolitical frictions in West Asia and fresh US tariffs. The momentum from Q1 FY27 (April-June 2026) continued into July with most high-frequency indicators reflecting sustained manufacturing and services activity.
India's manufacturing sector demonstrated exceptional strength with industrial production strengthening sharply in June, recording its strongest growth in nearly two years, supported by broad-based acceleration in manufacturing. The services sector also exhibited resilience during this period. Trade performance remained robust with merchandise exports growing strongly at 19.6% year-on-year to $44.2 billion and imports rising 17.5% to ₹76.2 billion in July 2026. As per the RBI bulletin, export growth was led by petroleum products, electronic goods and engineering products, with exports achieving a four-month high in 2026-27 so far. However, the merchandise trade deficit widened to $32 billion in July, reflecting increased deficits in electronic goods.
Domestic demand remained buoyant with vehicle and tractor sales reflecting sustained consumer activity, while petroleum product consumption growth returned to positive territory after three straight months of contraction. According to the RBI, headline CPI inflation edged up to 4.45% in July 2026 from 4.38% in June, driven primarily by food prices. However, officials observed that this increase was primarily due to supply-side pressures, with stable core inflation reaffirming the lower pass-through of cost pressures. The recovery in southwest monsoon in July helped kharif sowing reach closer to normal acreage, partly mitigating risks to the agriculture sector.
