A Season of Cautionary Spending
For countless urban families, the upcoming festive period is marked by a sense of financial anxiety. A recent survey highlights this sentiment, revealing that total festive spending by urban households is projected to decrease by 6% to ₹1.97 lakh crore
this year. While the desire to celebrate remains strong, the capacity to spend freely has diminished. More than half of the households in one poll reported their financial situation has worsened compared to a year ago. This has led to a noticeable shift in consumer behaviour, with only 57% of urban households planning to make discretionary purchases this season, while a significant 31% intend to avoid such spending altogether. This caution reflects a broader trend of households dipping into their savings to fund even essential festive expenses.
The Pinch of Pervasive Inflation
The primary driver of this budgetary rethink is inflation, which has become impossible to ignore. India's retail inflation climbed to 5.54% in September, with food inflation hitting an even more concerning 7.74%. This isn't just a headline number; it translates into higher prices for everyday festive items. Groceries, cooking ingredients, sweets, and snacks are all more expensive. Beyond the kitchen, the costs of new clothes, electronics, and travel have also risen. Adding to the pressure, the Reserve Bank of India raised its key repo rate in early October, making loans for big-ticket items like cars and home appliances more expensive and increasing the burden of existing EMIs.
Reconsidering the 'Big Buys'
Traditionally, the festive season is a popular time for significant purchases, from new vehicles to the latest gadgets. This year, however, many are holding back. The costs for electronics like televisions and refrigerators have reportedly seen increases of 10% to 25%. Similarly, gold and silver, popular Dhanteras purchases, have seen exceptionally sharp price hikes, with inflation for silver jewellery at a staggering 87.8% in September. This has led to a marked drop in purchasing intent, with one survey showing only 6% of respondents planning to buy jewellery. While overall online retail is expected to grow, it's driven by more orders of smaller value rather than large, expensive items. This indicates a move away from splurging on single, high-cost products.
Adapting Traditions, Not Abandoning Them
Despite the financial constraints, the spirit of the festive season endures. Instead of cancelling plans, families are finding creative ways to adapt. The focus is shifting from quantity and extravagance to quality and meaning. Many are prioritising essential festive purchases like clothing and home necessities over luxury goods. Some surveys show that consumers are choosing to shop at local markets over malls or online platforms, perhaps in search of better deals and a way to support community businesses. There's a clear trend towards smarter shopping, with households planning their purchases more carefully and looking for value. This might mean smaller gatherings, homemade sweets instead of store-bought ones, or focusing on shared experiences rather than expensive gifts. The core traditions remain, but they are being reimagined within a new economic reality.
