The survey received more than 67,000 responses from urban household consumers across 307 districts. Of those surveyed, 57 per cent said they were likely to spend on discretionary purchases this festive season, while 31 per cent said they planned no such spending.
Inflation and borrowing costs weigh on spending
The expected moderation in festive spending comes against a backdrop of rising prices and tighter monetary conditions. Retail inflation, measured by the Consumer Price Index (CPI), rose to 5.54 per cent in September from 4.83 per cent in August, while food inflation increased to 7.74 per cent from 5.97 per cent, according to government data cited in the report.
The Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50 per cent on October 7, its first increase in more than three and a half years. The move could make borrowing costlier for households planning big-ticket purchases during the festive period.
The RBI also raised its FY27 inflation projection to 5.2 per cent and expects inflation to peak at 6 per cent in the October-December quarter, which coincides with the festive season.
Consumers prioritise clothing and travel
Spending plans remain concentrated in select categories. Around 72 per cent of households planning festive purchases expect to buy clothing, footwear and accessories, making these the most popular categories.
Home appliances and furniture, as well as travel and holidays, were each cited by 45 per cent of respondents. Gourmet food and gifting accounted for 39 per cent, while 22 per cent planned to purchase mobile phones, consumer electronics and gadgets. Only 6 per cent intended to buy jewellery, reflecting affordability concerns amid elevated gold and silver prices.
Savings to support festive purchases
The survey found that 83 per cent of households planning festive spending expect to use savings to fund at least part of their purchases. Around 34 per cent expect savings to cover at least a quarter of their festive expenditure, including 16 per cent who plan to finance it entirely through savings.
LocalCircles said the findings point to a more subdued festive season, with households relying on accumulated savings to sustain spending even as inflation and borrowing costs put pressure on budgets.