Urban India is heading into the festive season with smaller spending plans, even as households prepare to shop for clothes, appliances and holidays. Total festive spending by urban households is estimated to fall 6% year-on-year to ₹1.97 lakh crore in 2026, from ₹2.10 lakh crore last year, as inflationary pressures and tighter household budgets weigh on discretionary consumption, according to a survey by LocalCircles.
Households are expected to spend an average of nearly ₹20,000 on festive purchases this year. However, only 57% of urban households surveyed said they were likely to spend, while 31% planned no discretionary purchases. Another 18% expect to keep their spending below ₹10,000, highlighting the caution among consumers despite the traditional boost in shopping during Navratri, Dussehra and Diwali.
The estimated decline follows a 14% increase in festive spending in 2025, when total urban household expenditure rose from ₹1.85 lakh crore in 2024 to ₹2.10 lakh crore. Last year's festive season coincided with the implementation of GST 2.0 rate cuts from September 22, which provided a boost to purchases. This year, households face no comparable tax-led stimulus, while rising prices are putting pressure on their budgets.
Retail inflation climbed to 5.54% in September from 4.83% in August, while food inflation rose to 7.74% from 5.97%, according to government data cited in the report. The Reserve Bank of India also raised the repo rate by 25 basis points to 5.50% on October 7, its first increase in more than three and a half years, making borrowing potentially more expensive.
The LocalCircles survey received more than 67,000 responses from urban consumers across 307 districts. Its estimate suggests that festive spending will remain above 2024 levels, but the pullback from last year's high points to a more measured consumption environment.
Fashion leads, but households turn to savings
Clothing, footwear and accessories remain the most popular festive purchases, with 72% of households planning to spend this season selecting the category. Home appliances and furniture, along with travel and holidays, came next, at 45% each. Gourmet food and gifting featured in the plans of 39% of respondents, while 22% intended to buy mobile phones, consumer electronics and gadgets. Another 22% planned home renovation or interior purchases.
Jewellery, however, featured in the plans of just 6% of respondents, amid elevated precious metal prices. Ten per cent intended to purchase an automobile or two-wheeler.
The spending distribution also shows a divide between households willing to make larger purchases and those holding back. While 30% expect to spend between ₹10,000 and ₹1 lakh, 9% plan to spend more than ₹1 lakh. Another 9% expect to spend between ₹50,001 and ₹1 lakh, while 6% anticipate spending between ₹25,001 and ₹50,000. The survey's spending brackets indicate that the bulk of planned expenditure remains concentrated below the ₹1 lakh mark.
An important feature of this year's festive spending plans is the reliance on savings. Among households planning to spend, 83% expect to use savings to some extent. Of these, 34% intend to fund at least a quarter of their festive expenditure from savings, including 16% who expect to finance their purchases entirely from accumulated savings. Meanwhile, 49% expect savings to cover less than a quarter of their spending, while 17% plan to rely entirely on earnings.
The findings come against a backdrop of weakening consumer sentiment. The RBI's July 2026 Urban Consumer Confidence Survey showed the Current Situation Index falling to 88.3 from 90.7, while the Future Expectations Index declined to 115.3 from 118.7. Households also expect prices to rise 9.4% over the next year, according to the central bank's inflation expectations survey.
The survey's overall estimate of ₹1.97 lakh crore indicates that urban households will continue to spend, but with tighter budgets and a greater dependence on savings than last year's festive season.