Urban India’s festive spending is expected to decline by 6% in 2026 as households become more cautious about discretionary purchases amid rising prices and pressure on household budgets. According to LocalCircles’ Mood of the Consumer 2026 survey, total festive expenditure by urban households is estimated at ₹1.97 lakh crore, compared with ₹2.10 lakh crore in 2025. Average discretionary festive spending is projected at nearly ₹20,000 per household.
The survey indicates that consumers are still preparing for the festive season but are becoming more selective about where they spend. Clothing, footwear and accessories remain the most popular planned purchases, while expensive items such as jewellery attract comparatively limited interest. Another important finding is that 83% of households planning festive purchases expect to use savings to some extent, suggesting that many families will rely on accumulated funds rather than current income alone.
Key Takeaways
- Festive spending estimate: Urban household spending is projected at ₹1.97 lakh crore in 2026, down 6% from ₹2.10 lakh crore in 2025.
- Average budget: Households expect to spend approximately ₹20,000 on discretionary festive purchases.
- Cautious consumers: 57% of surveyed households expect to make festive discretionary purchases, while 31% plan no such spending.
- Clothing leads: 72% of households planning purchases intend to buy clothing, footwear or accessories.
- Savings take priority: 83% of households expecting to spend plan to use savings to some extent.
- Inflation pressure: Higher consumer prices and borrowing costs are contributing to a more restrained spending outlook.
- Still above 2024: The estimated ₹1.97 lakh crore remains above the ₹1.85 lakh crore estimated for 2024.
Urban Festive Spending Expected to Decline in 2026
LocalCircles estimates that total festive spending by urban Indian households will fall from ₹2.10 lakh crore in 2025 to ₹1.97 lakh crore in 2026. This represents a decline of approximately 6%.
The projected moderation follows an increase in festive spending during 2025, when the estimated total rose from ₹1.85 lakh crore in 2024 to ₹2.10 lakh crore. LocalCircles noted that GST rate cuts introduced on September 22, 2025, coincided with the start of the festive shopping period and provided a boost to consumer purchases.
In 2026, households face a different environment. Retail inflation increased to 5.54% in September from 4.83% in August, while food inflation reached 7.74%, according to figures cited in the survey report. Higher prices can leave families with less money for non-essential purchases after paying for food, housing, utilities and other regular expenses.
The survey received more than 67,000 responses from urban household consumers across 307 districts. Its findings suggest that consumers are adjusting their budgets rather than abandoning festive shopping altogether.
Nearly One-Third of Households Plan No Discretionary Spending
The survey points to a clear divide between households preparing to shop and those planning to avoid additional purchases.
Of the responses to the survey’s spending-budget question, 31% indicated that their households would make no discretionary purchases during the festive season. Another 18% expected to spend less than ₹10,000.
At the other end of the scale, 9% anticipated discretionary spending of more than ₹1 lakh. A further 12% were uncertain about how much they would spend.
| Planned festive spending | Share of respondents |
|---|---|
| No discretionary spending | 31% |
| Less than ₹10,000 | 18% |
| ₹10,001–₹25,000 | 15% |
| ₹25,001–₹50,000 | 9% |
| ₹50,001–₹1 lakh | 6% |
| ₹1 lakh–₹10 lakh | 9% |
| Undecided | 12% |
Source: LocalCircles Mood of the Consumer 2026 survey. Percentages may reflect rounding.
The findings suggest that the spending slowdown is not necessarily a sign that consumers have lost interest in festive shopping. Instead, households appear to be setting clearer limits on non-essential expenses and prioritizing purchases they consider necessary for celebrations.
Clothing and Fashion Remain the Top Spending Category
Clothing, footwear and accessories are the leading categories in households’ festive shopping plans. Among households expecting to spend, 72% said they intended to purchase products in this category.
Home appliances and furniture, as well as travel and holidays, each attracted 45% of responses. Gourmet food and gifting accounted for 39%, while mobile phones and consumer electronics were each cited by 22%.
| Planned purchase category | Share of households planning festive spending |
|---|---|
| Clothing, footwear and accessories | 72% |
| Home appliances and furniture | 45% |
| Travel and holidays | 45% |
| Gourmet food and gifting | 39% |
| Mobile phones | 22% |
| Consumer electronics and gadgets | 22% |
| Home renovation and interiors | 22% |
| Automobile or two-wheeler | 10% |
| Jewellery | 6% |
Source: LocalCircles survey. Respondents could select multiple categories, so percentages do not add up to 100%.
The figures show that consumers continue to plan purchases across fashion, household goods and experiences. However, the relatively low share planning jewellery purchases suggests that expensive items may be losing priority as households manage their budgets.
The category results also offer useful signals for retailers. Businesses selling affordable clothing, accessories, gifts and everyday festive products may be better positioned to appeal to budget-conscious consumers than sellers relying heavily on high-value discretionary purchases.
Why Household Savings Are Funding Festive Purchases
One of the survey’s most significant findings concerns how consumers expect to pay for their festive shopping.
LocalCircles found that 83% of households planning festive spending expect to use savings to some extent. Within that group, 34% said savings would cover at least 25% of their festive expenditure, including 16% who expected to finance their purchases entirely from savings.
Using savings can help consumers avoid taking on additional debt. However, heavy reliance on accumulated funds may also leave households with smaller financial reserves for emergencies and upcoming expenses.
The findings therefore raise an important question about the sustainability of festive demand. Spending can remain relatively strong for selected categories even when households feel financially constrained, but relying on savings does not necessarily indicate that their underlying purchasing power has improved.
For retailers, the distinction matters. Strong sales during a promotional period may not automatically translate into sustained demand in the months that follow.
Inflation and Borrowing Costs Put Pressure on Budgets
The spending outlook comes amid higher consumer inflation and tighter financial conditions.
Retail inflation rose to 5.54% in September 2026 from 4.83% in August, while food inflation increased to 7.74%, according to the figures cited by LocalCircles. Rising food and essential expenses can reduce the portion of household income available for celebrations, electronics, travel and other discretionary items.
The survey report also points to the Reserve Bank of India’s October 7 rate increase as a potential pressure on borrowing costs. Higher interest rates can make some loans more expensive, depending on how lenders adjust their rates and how borrowers’ loans are structured.
These factors help explain why households may continue buying festive essentials while delaying larger purchases. They also suggest that discounts and affordable product options could play a greater role in influencing consumer decisions during the 2026 season.
The survey does not establish that inflation or interest rates alone caused the projected decline. Rather, the results show that the spending slowdown coincides with economic pressures that can make households more cautious.
What the Spending Outlook Means for Retailers
For retailers and consumer brands, the projected decline signals the importance of understanding changing household priorities.
Affordable products, value-oriented bundles and transparent discounts may appeal to consumers seeking to maintain festive traditions without exceeding their budgets. Clothing and fashion businesses could benefit from their strong position in purchase plans, while home appliances, travel providers and electronics retailers may need to pay closer attention to affordability.
The survey also suggests that brands should avoid treating festive spending as a single, uniform market. Some households plan no discretionary purchases, while a smaller group expects to spend more than ₹1 lakh. Different price points and customer segments may therefore respond differently to promotions.
Online shopping activity can remain strong even when overall spending expectations soften, because consumers may shift purchases between channels or focus on selected categories. Planned expenditure should also be distinguished from completed transactions: actual retail performance will depend on prices, discounts, product availability and how households behave during the season.
The Bigger Picture
Urban India’s projected festive spending decline points to a more cautious consumer environment in 2026. Households still intend to celebrate, but they appear more selective about discretionary purchases and more willing to use savings to finance them. This combination suggests that retailers may need to focus on affordability and value rather than relying solely on broad-based growth in consumer demand.
The outlook also highlights why spending estimates should be interpreted carefully. The ₹1.97 lakh crore figure is a survey-based projection, not a final tally of sales across India’s retail sector. Actual spending may differ as households make last-minute decisions and retailers respond with promotions. Nevertheless, the survey offers an early indication that household budgets will be an important factor shaping the festive market this year.
FAQs
1. How much is urban India expected to spend during the 2026 festive season?
LocalCircles estimates that urban Indian households will spend ₹1.97 lakh crore on discretionary festive purchases in 2026, approximately 6% less than the ₹2.10 lakh crore estimated for 2025.
2. What is the average festive spending budget per household?
The survey estimates average discretionary festive spending at nearly ₹20,000 per urban household.
3. Which products are consumers most likely to buy?
Clothing, footwear and accessories lead planned purchases, with 72% of households expecting to spend on these categories. Home appliances and furniture, and travel and holidays, follow at 45% each.
4. Why is festive spending expected to decline?
The survey points to rising inflation, pressure on household budgets and higher borrowing costs as factors associated with more cautious spending. The results do not prove that any single factor is responsible for the projected decline.
5. How many households plan to use savings for festive purchases?
Among households planning festive spending, 83% expect to use savings to some extent. The survey also found that 34% expect savings to fund at least a quarter of their festive expenditure.
Looking Ahead
The final festive-season sales figures will show whether the cautious spending intentions captured by LocalCircles translate into a decline in actual purchases. Retailers, consumer brands and e-commerce platforms will be watching demand across fashion, electronics, home goods and travel to determine which categories remain resilient and where households are cutting back.
For consumers, the findings reinforce the importance of setting realistic festive budgets and protecting emergency savings. For businesses, the message is that festive demand remains substantial, but attracting customers in 2026 may depend more heavily on affordability, targeted offers and products that deliver clear value.
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
