Urban India’s festive spending set to fall 6 per cent to Rs 1.97 lakh crore

MUMBAI: The festive spirit may be high, but shoppers are keeping a tighter grip on their purse strings. Urban Indian households are expected to spend Rs 1.97 lakh crore on discretionary purchases this festive season, down 6 per cent from Rs 2.10 lakh crore in 2025, as consumers weigh their shopping wish lists against household budgets, according to a survey by LocalCircles.

The survey gathered more than 67,000 responses from urban consumers across 307 districts, offering a broad snapshot of festive spending intentions. While 57 per cent of households said they planned to make festive purchases, nearly a third appeared ready to sit out discretionary shopping altogether. Another 31 per cent said they did not intend to spend on non-essential items, while 12 per cent remained uncertain about how much they would spend.

The projected decline marks a reversal from last year’s festive season, when urban discretionary spending rose from Rs 1.85 lakh crore in 2024 to Rs 2.10 lakh crore in 2025. That increase coincided with GST rate cuts introduced in September 2025. This year, however, the LocalCircles estimate points to a more cautious approach, with consumers appearing less willing to loosen their purse strings.

Among households planning to spend, 30 per cent expect their festive outlay to fall between Rs 10,000 and Rs 1 lakh. Another 18 per cent intend to keep their spending below Rs 10,000, while 9 per cent anticipate spending more than Rs 1 lakh. The figures suggest that festive shopping remains on the agenda for many households, but the amount they are prepared to commit varies considerably.

Clothing, footwear and accessories are set to lead the shopping list, with 72 per cent of households planning purchases in these categories. The appeal of a festive wardrobe refresh remains strong, even as spending intentions soften elsewhere.

Home appliances and furniture, along with travel and holidays, are each on the shopping plans of 45 per cent of households. Gourmet food and gifting follow at 39 per cent, while mobile phones, consumer electronics and gadgets feature in the plans of 22 per cent each. Another 22 per cent intend to spend on home renovation and interiors.

Bigger-ticket purchases appear less widespread. Automobiles and two-wheelers feature in the plans of 10 per cent of households, while jewellery attracts just 6 per cent. The contrast suggests that consumers are prioritising everyday lifestyle purchases and experiences over some of the more expensive items traditionally associated with festive spending.

The survey also highlights how households intend to finance their purchases. Rather than relying entirely on current earnings, many plan to dip into savings. Among households expecting to make discretionary purchases, 83 per cent said they would use at least some savings to fund their festive spending.

About 34 per cent plan to cover at least a quarter of their outlay through savings. This includes 18 per cent who expect savings to finance between 25 and 50 per cent of their expenditure, and 16 per cent who intend to pay for all their festive purchases from savings. By contrast, 17 per cent said they would rely entirely on earnings rather than savings. No respondents selected borrowing as a way to fund their planned purchases.

The reliance on savings adds another dimension to the spending outlook. Consumers are still planning to shop, but their willingness to spend may be constrained by how much money they want to preserve for other household needs. The survey findings point towards a festive season in which shoppers are making choices rather than abandoning shopping altogether.

Inflation provides part of the backdrop to this caution. Retail inflation reached 5.54 per cent in September 2026, up from 4.83 per cent in August, while food inflation rose to 7.74 per cent from 5.97 per cent, according to government data cited in the survey. Higher food prices can put pressure on household budgets, leaving less room for discretionary purchases after essential expenses have been covered.

Interest rates and consumer sentiment also form part of the wider picture. The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent on 7 October. The central bank also increased its consumer price inflation forecast for FY27 to 5.2 per cent from 5 per cent and expected inflation to reach 6 per cent in the October-December quarter.

Consumer confidence indicators have weakened as well. In the RBI’s July 2026 Urban Consumer Confidence Survey, the Current Situation Index fell to 88.3 from 90.7, while the Future Expectations Index declined to 115.3 from 118.7. These measures provide additional context for the more restrained spending outlook, although they do not, by themselves, establish why households intend to spend less.

Yet the picture is far from uniformly subdued. Some indicators of economic activity and retail demand continue to show strength, suggesting that a lower projected festive spending total does not necessarily mean every category or sales channel is losing momentum.

September GST collections rose 14.7 per cent year on year to Rs 2.04 lakh crore. Vehicle retail sales increased 31.8 per cent to a record 25.37 lakh units, although the Federation of Automobile Dealers Associations cautioned that the growth was partly influenced by a low base. The vehicle figures underline the importance of distinguishing actual demand from comparisons with a weaker previous period.

Online marketplaces have also reported strong activity. Flipkart recorded 6.3 million concurrent users, with around 60 per cent of demand coming from non-metro customers. Meesho reported a 75 per cent year-on-year increase in orders on the first day of its festive sale across fashion, beauty and festive décor.

These platform-level figures point to considerable activity in online shopping, particularly beyond metropolitan markets. However, they measure different aspects of consumer behaviour from the LocalCircles survey’s estimate of total urban discretionary spending. Strong traffic or order growth on a particular platform does not necessarily translate into higher spending across the entire market.

Electronics could face a different trajectory. Counterpoint Research expects festive smartphone volumes to decline 12 per cent year on year as higher memory chip costs push up device prices. Despite the expected fall in units sold, the value of the smartphone market is projected to increase 5 per cent. This suggests that higher prices could support market value even if consumers purchase fewer devices.

For retailers, the mixed signals make the festive season harder to read. Apparel and accessories appear well placed to attract shoppers, while travel, home improvements and appliances also feature prominently in spending plans. Jewellery and automobiles have a smaller share of intended purchases in the LocalCircles survey, while smartphones could face pressure on volumes even as the value of sales rises.

The figures also underline why festive demand cannot be judged by a single indicator. Tax collections, vehicle registrations, online orders, smartphone shipments and household spending intentions measure different parts of the economy. Taken together, they offer a more nuanced picture of a market where some consumers remain active while others are becoming more selective.

The LocalCircles survey is based on more than 67,000 responses across 307 districts, but its projected spending total remains an estimate of intended behaviour rather than a final tally of actual purchases. How closely spending matches those intentions will depend on household budgets, prices, offers and the decisions consumers make as the season progresses.

For now, the festive season appears set to deliver a more measured shopping spree than last year. Clothing may still make the cut, travel and home upgrades remain on many wish lists, and online platforms are drawing substantial activity. But with total urban discretionary spending projected to fall 6 per cent to Rs 1.97 lakh crore, the message is clear: shoppers are not necessarily cancelling the festivities — they are deciding more carefully what makes it into the basket.