The Numbers Behind the Concern
The festive mood is being tested by stark economic realities. India's retail inflation accelerated to 5.54% in September 2026, a significant jump from 4.83% in August. This marks the fourth straight month that inflation has remained above the Reserve
Bank of India's 4% target. The primary driver is a surge in food prices, with food inflation climbing to a staggering 7.74%. Items like onions, garlic, and even a simple home-cooked thali have seen steep price increases, directly impacting daily expenses and leaving less room for discretionary spending. Compounding this, the RBI recently increased its key repo rate, making loans more expensive and further tightening household finances.
A Subdued Season for Spending
Surveys reflect a growing sense of caution among consumers. One recent report estimates that total festive spending by urban households is set to decline by 6% this year, falling to ₹1.97 lakh crore from ₹2.10 lakh crore in 2025. While a majority of families still plan to shop, a significant portion—nearly one-third—are planning no major discretionary purchases at all. This sentiment is echoed by an RBI survey which found that over half of urban households feel their financial situation has worsened compared to last year. The data reveals a clear trend: families are not giving up on celebrations, but they are becoming far more deliberate and budget-conscious.
From Big-Ticket Buys to Smart Swaps
The reassessment of spending is most visible in high-value categories. While clothing and footwear remain top priorities for festive shoppers, plans for big-ticket items are being scaled back. Only a small fraction of households are considering purchasing automobiles (10%) or jewellery (6%) this season, categories that have seen sharp price increases. Silver jewellery, for instance, recorded inflation of over 87% in September. Instead of forgoing purchases entirely, many are making smarter swaps. This could mean opting for smaller electronic gadgets over large home appliances, choosing more affordable brands, or focusing on home renovation and travel instead of acquiring new assets. Many are also relying more on their savings to fund their festive plans, with one survey showing 83% of shoppers will dip into their savings.
The Ripple Effect on Businesses
This cautious consumer approach has a direct impact on retailers and the broader economy. While some trade bodies remain optimistic, projecting overall festive sales to grow, there is an undercurrent of concern. Retailers have reported a 'measured recovery' rather than a confident boom, with many remaining cautious about stocking up on inventory. The shift in spending patterns benefits some sectors more than others. Local markets and value-led categories are seeing more traction as consumers hunt for deals. In contrast, sectors reliant on big-ticket discretionary spending face a more challenging environment. The festive season, which typically accounts for a large portion of annual sales for many businesses, is shaping up to be a test of resilience and adaptability for both consumers and companies alike.
