The festive season is here, bringing with it the familiar buzz of celebration. But in 2026, many Indian households are rewriting their festive playbooks, navigating a landscape of rising costs with a mix of cautious optimism and savvy strategies.
A Tale of Two Trends
This
year's festive spending paints a complex picture. On one hand, there's a clear mood of caution. A LocalCircles survey projects that overall spending by urban households will see a 6% dip, down to ₹1.97 lakh crore from ₹2.10 lakh crore in 2025. This suggests that many families are tightening their belts. In fact, 31% of urban households plan to avoid non-essential spending altogether. On the other hand, a different survey by Saarva found that 77% of urban consumers expect to spend more than in a regular month. This isn't a contradiction but a sign of focused spending. Consumers are willing to open their wallets, but they are being highly selective, choosing to spend more on fewer, more meaningful categories. The average spend per urban household is expected to be around ₹20,000.
The Inflation Squeeze
The primary driver behind this cautious approach is inflation. With retail inflation hitting 5.54% in September and food inflation climbing to 7.74%, the cost of daily life has noticeably increased. Some festive-specific items have seen even sharper price hikes. For instance, the inflation rate for gold and diamond jewellery stood at a staggering 35.53% as of August 2026. This pressure on household budgets is forcing consumers to become smarter shoppers. A YouGov report found that 26% of consumers plan to stick to their budget by shopping more carefully, while 23% intend to cut back on non-essentials. This has led to a greater focus on value, with shoppers comparing prices and looking for the best deals before making a purchase.
Dipping Into Savings and Embracing EMIs
To fund their festive plans, a significant number of households are turning to their savings. The LocalCircles survey revealed that 83% of families planning to spend will use their savings to some extent, and for 34% of them, savings will cover at least a quarter of their festive expenditure. This reliance on accumulated funds rather than current income points to a more deliberate financial strategy. Alongside savings, flexible payment options like 'Buy Now, Pay Later' (BNPL) and EMIs are gaining significant traction, particularly for big-ticket items. The Indian BNPL market itself is estimated to be worth over USD 19 Billion in 2026. At Amazon's Great Indian Festival, for instance, more than one in three customers opted for EMIs, and transactions using its Pay Later service doubled compared to the previous year.
Shifting Shopping Carts
So, what are people buying? Apparel, footwear, and fashion accessories remain the top priority, with 72% of festive shoppers planning to buy in this category. Home appliances, furniture, and travel also feature prominently in about 45% of shopping lists. However, some traditional high-value purchases are taking a backseat. With gold prices soaring, only 6% of respondents in one survey planned to buy jewellery. Instead, there's a focus on more practical items and experiences. The online shopping boom continues unabated, with e_commerce sales projected to grow by 25–29% this festive season. This growth is increasingly driven by shoppers in Tier 2 and 3 cities, who now account for a majority of customers and sales on major platforms.
