Urban India Is Turning To Savings To Fund Its Festive Shopping

India’s festive season is a crucial period for retailers, consumer brands and e-commerce platforms. But this year, shoppers appear to be approaching discretionary purchases more carefully, with household savings expected to play a significant role in funding the season.

LocalCircles’ Mood of the Consumer 2026 survey estimates that urban households will spend ₹1.97 lakh crore on festive purchases this year, 6% less than the ₹2.10 lakh crore estimated for 2025. More tellingly, 83% of households planning festive purchases expect to use savings to some extent. 

The findings raise questions about the strength of consumer demand and whether spending can hold up after the festive rush.

Festive Spending Loses Steam

The LocalCircles survey received more than 67,000 responses from urban household consumers across 307 districts. It found that 57% of respondents planned discretionary festive purchases, while 31% said they did not plan any. The estimated average spend was around ₹20,000 per household.

The spending estimate is lower than last year’s, but remains above the ₹1.85 lakh crore estimated for 2024. LocalCircles attributed the rise in 2025 partly to GST rate cuts that took effect on September 22 that year, coinciding with the start of the festive shopping season. This year, there is no comparable tax-led boost, making the year-on-year comparison less favourable.

Household budgets are also facing price pressures. Government data cited by LocalCircles put retail inflation at 5.54% in September 2026, up from 4.83% in August, while food inflation rose to 7.74%. Higher everyday expenses can leave consumers with less room for purchases such as electronics, furniture and other non-essential goods.

The survey captures spending plans rather than completed transactions, so the final picture will depend on what households actually buy during the season.

Savings Step In

The survey’s findings on funding offer a closer look at how consumers intend to manage festive budgets. Of households planning purchases, 49% expect savings to cover less than a quarter of their festive spending, 18% expect savings to fund 25–50%, and 16% plan to rely entirely on savings. Another 17% expect to fund their purchases entirely from current earnings.

In total, 83% expect to use savings to some extent, while 34% expect savings to cover at least a quarter of their budget. These figures do not necessarily indicate financial distress. Households may have set aside money for festivals in advance, and the survey does not establish whether they will need to reduce emergency reserves or long-term investments.

For consumer businesses, however, the findings make the sustainability of demand an important question. If households use accumulated savings for festive purchases, will they continue spending at the same pace in the months that follow? The survey cannot answer that on its own, but early retail trends show how consumers are balancing purchases against prices.

Where The Money Goes

Clothing, footwear and accessories lead the list of planned purchases, cited by 72% of respondents planning festive spending. Home appliances and furniture, and travel and holidays, were each cited by 45%. Gourmet food and gifting followed at 39%, while 22% planned purchases of mobile phones, consumer electronics and gadgets. Only 6% planned to buy jewellery. Respondents could select more than one category.

Early online sales suggest consumers are still shopping, but increasingly looking for value. According to The Times of India, which cited data from Redseer Strategy Consultants for October 8–12, items priced below ₹500 accounted for about half of festive orders in value commerce. Redseer also said average order values were 7–8% lower than a year earlier, reflecting a shift towards lower-priced products and categories.

The report also cited Amazon India executive Aman Deep Lohan, who said the share of purchases made using no-cost EMIs on Amazon had risen to 50%, from about 30% a year earlier. This points to a greater role for instalment options in high-value purchases, though it does not establish that consumers are relying on credit across the market.

Datum Intelligence, as cited by Financial Express in its October 8 report, projected festive e-commerce sales to grow 25–29% to ₹1.5–1.55 lakh crore in 2026, driven by higher volumes rather than deeper discounts. The report also cited data from 1digitalstack.ai showing that prices across several major online categories, including smartphones, laptops, air conditioners and clothing, were higher than during last year’s festive sales.

Demand also differs by product. LocalCircles cited Meesho’s report of a 75% year-on-year increase in first-day orders across fashion, beauty and festive décor. By contrast, Counterpoint Research expected festive smartphone volumes to fall 12% year-on-year as rising memory-chip costs pushed up prices, even as market value was projected to rise 5%.

These indicators measure different things—planned household spending, platform orders and category forecasts—but together suggest that demand is uneven rather than uniformly weak.

The Post-Diwali Spending Test

For retailers, the next test will be whether festive purchases translate into sustained demand or bring forward spending that might otherwise have happened later. Households that spend on clothing, travel or appliances now may have less room for another discretionary purchase, particularly if everyday costs remain elevated. But a post-Diwali slowdown is not inevitable: incomes, prices, discounts and category-specific demand will all matter.

Retailers will need to track sales volumes alongside average order values, product mix and the use of financing offers. Rising order numbers do not necessarily mean consumers are spending more per transaction, while higher sales values can partly reflect price increases rather than more units sold.

For now, the LocalCircles survey points to a festive season in which savings are expected to help fund purchases, while spending plans remain cautious and uneven. Whether that caution carries into the months after Diwali will become clearer as actual sales data emerge.