India’s urban households are expected to spend less during the 2026 festive season, with total festive spending projected to decline 6% year-on-year to ₹1.97 lakh crore from ₹2.10 lakh crore in 2025. The estimate comes from LocalCircles’ Mood of the Consumer survey, which points to cautious purchasing decisions as rising prices and tighter household budgets weigh on discretionary expenditure.
The survey suggests that consumers are not abandoning festive shopping altogether but are becoming more selective about where their money goes. Clothing, footwear and accessories remain the most popular planned purchases, while home appliances, furniture, travel and gifting also feature prominently. However, many households expect to draw on accumulated savings to finance their purchases, highlighting the pressure on current disposable incomes.
Key Takeaways
- Estimated festive spending: ₹1.97 lakh crore in 2026, down 6% from ₹2.10 lakh crore in 2025.
- Survey coverage: More than 67,000 responses from urban consumers across 307 districts.
- Spending participation: 57% of surveyed households said they were likely to spend during the festive season.
- Savings reliance: 83% of households planning festive spending expect to use savings.
- Top category: Clothing, footwear and accessories, cited by 72% of households planning to spend.
- Other popular categories: Home appliances and furniture, travel and holidays, and gourmet food and gifting.
- Main concern: Inflation and tighter budgets are encouraging consumers to prioritise selected purchases rather than increase overall expenditure.
How Much Will India Spend This Festive Season?
LocalCircles estimates that urban festive spending will reach ₹1.97 lakh crore in 2026, compared with ₹2.10 lakh crore in 2025. The projected reduction represents a decline of approximately ₹13,000 crore.
| Metric | 2025 | 2026 estimate |
|---|---|---|
| Total urban festive spending | ₹2.10 lakh crore | ₹1.97 lakh crore |
| Year-on-year change | — | -6% |
| Average planned discretionary spending | — | Nearly ₹20,000 |
| Households likely to spend | — | 57% |
| Households planning no discretionary purchases | — | 31% |
The projected total remains above the ₹1.85 lakh crore recorded in 2024. However, the comparison suggests that the strong increase estimated for 2025 may not be sustained this year.
The survey attributes the softer outlook partly to the absence of a comparable tax-led boost. GST rate cuts that took effect on September 22, 2025, coincided with the beginning of the festive season and supported consumer purchasing power in several categories. In 2026, households face a different spending environment.
The estimate refers specifically to urban festive spending captured by the survey. It should not be interpreted as a complete measure of all festive-related expenditure across rural and urban India.
What Is Behind the Expected Spending Decline?
Rising prices are squeezing household budgets
Higher prices for everyday necessities can leave households with less money available for discretionary purchases such as electronics, furniture, clothing and holidays.
When food, transport and other essential expenses consume a larger share of income, consumers may postpone purchases, reduce quantities or look for lower-priced alternatives. Even households that continue shopping can spend less overall by narrowing their shopping lists.
The LocalCircles survey points to this cautious behaviour. While many urban households still intend to make festive purchases, a sizeable proportion do not plan discretionary spending at all.
No comparable tax-led boost this year
The GST rate cuts introduced in September 2025 provided a favourable backdrop for last year’s festive shopping season. Lower tax rates on selected products can reduce final prices or create additional room for discounts, potentially encouraging consumers to make purchases.
The survey indicates that this year lacks a comparable tax-driven stimulus. As a result, retailers may have to rely more heavily on affordability, promotions, product availability and consumer confidence to support sales.
This does not mean every retail category will experience a decline. Demand can vary substantially depending on prices, discounts, household income and the timing of purchases.
Borrowing costs and savings matter
Household spending decisions are also influenced by borrowing costs and access to savings. Higher financing expenses can make purchases funded through loans or credit less attractive, particularly for expensive products.
The survey also reported that the Reserve Bank of India’s October 7 rate hike contributed to a tighter household budget environment. The precise impact on individual consumers will depend on their borrowing arrangements, income and savings.
Clothing Remains the Leading Festive Purchase
Clothing, footwear and accessories are the most widely planned festive purchases in the survey. Among households planning to spend, 72% expect to buy items in this category.
| Spending category | Share of spending households planning purchases |
|---|---|
| Clothing, footwear and accessories | 72% |
| Home appliances and furniture | 45% |
| Travel and holidays | 45% |
| Gourmet food and gifting | 39% |
| Jewellery | 6% |
The percentages reflect reported purchase intentions and do not represent each category’s share of total spending. Respondents may plan purchases in more than one category.
Why apparel remains important
Festivals often involve buying new clothes, footwear and accessories for family gatherings, celebrations and social occasions. These products can also be purchased across a wide range of price points, allowing consumers to adjust spending without abandoning the category entirely.
Retailers may benefit from shoppers shifting towards lower-priced items, smaller baskets or promotional offers. However, the overall effect on sales will depend on whether lower prices are enough to compensate for weaker discretionary spending.
Jewellery faces a different challenge
Only 6% of households planning festive spending said they expected to purchase jewellery. Elevated precious-metal prices may make gold and other jewellery purchases more expensive, particularly for households that are already managing tighter budgets.
The low reported purchase intention does not establish how much consumers will spend on jewellery in total. A smaller number of buyers can still account for substantial expenditure if they make high-value purchases.
Why Are Households Using Savings for Festive Shopping?
One of the survey’s most notable findings is that 83% of urban households planning festive spending expect to dip into savings to finance their purchases.
Among these households, 34% expect savings to cover at least a quarter of their festive expenditure, including 16% who plan to finance their festive purchases entirely through savings.
These findings suggest that current income may not be sufficient—or may not be the preferred source—for planned seasonal expenditure. Savings provide flexibility, but relying on them also reduces the financial cushion available for emergencies and future expenses.
The figures do not necessarily mean every household is under financial distress. Some consumers routinely set aside money for festivals throughout the year. The distinction is whether spending is funded by planned savings or by drawing down money needed for essential expenses and unexpected costs.
For households, maintaining an emergency fund and setting a firm festive budget can help prevent seasonal purchases from creating financial pressure later.
What the Survey Says About Consumer Confidence
The survey received more than 67,000 responses from urban household consumers across 307 districts. Respondents included 63% men and 37% women. Geographically, 41% came from Tier 1 districts, 28% from Tier 2 districts and 31% from Tier 3 and Tier 4 districts.
LocalCircles said its survey used a proprietary stratified sampling methodology, minimum participation targets across gender and location groups, and bootstrapping to test the margin of error. It reported a margin of error below 7% and a confidence level above 93% for its polls.
As with any survey, the results reflect reported intentions and the methodology used to collect responses. Actual expenditure may differ as consumers respond to discounts, changing prices, income developments and last-minute purchasing needs.
The findings are best read as an indicator of urban consumer sentiment, not as a definitive forecast of every household’s behaviour or total national consumption.
What the Spending Outlook Means for Retailers
A 6% decline in estimated urban festive spending could create challenges for retailers that rely on the festive period for a substantial portion of annual sales.
Businesses may need to focus on value-oriented products, targeted promotions and better inventory management. Retailers that offer products across multiple price ranges could be better positioned to serve shoppers who remain interested in buying but are increasingly careful about expenditure.
The effects will not necessarily be uniform. Apparel, home products, travel, food and jewellery operate under different demand conditions. Some categories may benefit from customers reallocating budgets, while others could face weaker demand because of higher prices or reduced purchase urgency.
Online marketplaces and physical retailers may also compete more aggressively for the same household budgets. Discounts can encourage purchases, but excessive discounting can put pressure on margins if businesses have limited room to absorb higher costs.
The Bigger Picture
India’s festive season is an important period for consumer businesses because it concentrates spending on clothing, gifts, home improvements, travel, food and other discretionary products. A decline in projected urban festive spending does not automatically indicate a broad economic downturn, but it does suggest that consumers are approaching seasonal purchases with greater caution. The distinction between purchase intent and actual spending is important: households may continue buying while choosing cheaper products, fewer items or fewer categories.
The LocalCircles findings also highlight the role of household savings in supporting consumption. Savings can help consumers manage seasonal expenses, but widespread reliance on them deserves attention when combined with rising living costs and tighter budgets. Retail sales data, company earnings and subsequent consumer surveys will help determine whether the projected slowdown remains concentrated in festive purchases or reflects a wider change in spending behaviour.
Looking Ahead
Retailers will be watching the remaining festive shopping period for signs that discounts, festival bonuses and seasonal demand can improve consumer activity. Clothing and value-oriented products may continue to attract shoppers, while expensive discretionary purchases could remain more sensitive to price changes and household budgets. The final outcome will depend on actual transactions rather than stated intentions alone.
For households, the findings reinforce the importance of planning festive expenditure around available income and savings. For businesses, the projected ₹1.97 lakh crore spending pool remains substantial, even with the expected decline. Whether the season ultimately delivers stronger or weaker results will become clearer as retailers report sales performance and consumers complete their purchases.
Frequently Asked Questions
1. How much will India spend during the 2026 festive season?
LocalCircles estimates urban festive spending at ₹1.97 lakh crore in 2026, down 6% from ₹2.10 lakh crore in 2025.
2. Which survey reported the expected decline?
The estimate comes from LocalCircles’ Mood of the Consumer survey, reported by Moneycontrol on October 14, 2026.
3. Why is festive spending expected to fall?
The survey points to rising prices, tighter household budgets and the absence of a comparable tax-led boost like the GST rate cuts that coincided with the 2025 festive season.
4. Which category is most popular among festive shoppers?
Clothing, footwear and accessories lead, with 72% of households planning festive spending expecting to purchase items in the category.
5. How many households plan to use savings for festive purchases?
According to the survey, 83% of urban households planning festive spending expect to dip into savings.
6. Are consumers avoiding all festive shopping?
No. The survey found that 57% of respondents were likely to spend during the festive season, while 31% planned no discretionary purchases. The findings suggest selective spending rather than a complete halt in shopping.
7. Does the estimate cover all of India?
The ₹1.97 lakh crore estimate refers to urban festive spending. It should not be treated as a comprehensive estimate of all urban and rural festive expenditure across the country.
8. What does the survey mean for retailers?
Retailers may need to focus on value, targeted discounts and inventory management as consumers become more selective. The impact will vary across categories and will depend on actual sales during the festive period.
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