A Climate of Caution
This year's festive mood is coloured by a backdrop of rising inflation. With retail inflation climbing to 5.54% in September and food prices surging even higher, households are feeling the pinch. This isn't just about abstract economic data; it translates
to more expensive groceries, higher fuel costs, and increased EMIs, all of which shrink the disposable income available for festive splurges. According to a recent survey by LocalCircles, this has led to a projected 6% drop in total urban festive spending compared to last year, from ₹2.10 lakh crore in 2025 to ₹1.97 lakh crore in 2026. While over half of urban households still plan to make discretionary purchases, a significant 31% do not, signalling a widespread sense of caution.
The New Shopping List: Needs Over Wants
So, where is the money going? The spending that is happening is more focused and deliberate. Instead of broad-based extravagance, families are prioritising. Clothing, footwear, and accessories top the list, with 72% of spending households planning purchases in this category. This reflects a desire to maintain the tradition of wearing new clothes for festivals. Following closely are home appliances, furniture, travel, and holidays, each cited by 45% of respondents. However, categories that involve larger financial outlays are seeing a significant pullback. For instance, only 22% plan to buy mobile phones or electronics, and a mere 6% intend to purchase jewellery, likely deterred by sharply rising gold prices. This shows a clear shift towards necessity and smaller upgrades rather than expensive status symbols.
Dipping Into Savings, Not Debt
To fund their festive plans, families are turning inward. An overwhelming 83% of households that intend to spend this season expect to use their savings to cover the costs. Of these, about a third will fund at least a quarter of their festive budget from savings, and 16% will rely on savings entirely. What’s particularly noteworthy is that almost no respondents indicated they would rely on borrowing to finance their festive purchases. This reflects a fiscally conservative mindset, where people prefer to cut back or use what they have rather than take on new debt in an environment of rising interest rates. Even the use of EMIs and instalment plans appears to be a choice for a smaller segment of consumers making specific large purchases.
A Shift in Priorities
While some traders remain optimistic about overall sales figures crossing ₹7 lakh crore, the data points to a more nuanced reality on the ground. The average spend per urban household is expected to be around ₹20,000. While some surveys indicate a high intent to spend, they also show that consumers are concentrating their spending in just one or two categories. There's a growing preference for shopping at local markets over online portals for many, suggesting a search for better value and a desire to support community businesses. At the same time, travel is emerging as a key priority, with nearly half of the respondents in one survey considering a family trip, favouring domestic and religious destinations. This suggests a pivot towards creating memories and experiences, perhaps as a more meaningful alternative to accumulating material goods during a time of financial restraint.
