Urban India’s spending appetite is back, but cautious

“Consumers remain financially secure, supported by declining price inflation concerns and rising savings. They are selectively increasing discretionary spending and opting for premium and experience-based purchases,” Deloitte’s September quarter consumer pulse survey of 1,000 consumers said, measuring future shopping intentions as well as financial security among households.

India is currently in the final stretch of its festival season, which usually runs from August to October and sometimes extends into early November. This year, there was temporary disruption in business activities as companies switched to the new goods and services tax (GST) rate regime from September 22. The revamped structure has seen GST rates reduced on most products used by common people.

Abhishek Bansal, managing director of New Delhi-based Pacific Development Corp, which operates Pacific Malls in North India, said, “The general mood after Navratri and GST cuts is quite optimistic. We have seen an increase in walk-ins (8-10%) in our malls. The electronics sector has recorded the biggest growth due to the GST cut. Electronics retailers have increased around approx. “It grew by 30%,” he said. “Stores and premium clothing brands have reduced their stocks by 5-10%; there has been no such increase in GST as 45% of their stocks have seen a price increase, but business is good.”

“Overall consumption growth on a like-for-like basis in shopping malls increased by 10% and total sales increased by 30%,” Bansal added.

Spend but be careful

The spending intention index for the September quarter points to a steady recovery in discretionary spending alongside rising savings. The index measures the change in monthly spending amounts.

Discretionary spending remains below its pre-pandemic peak but continues to rise year over year, especially during holiday and seasonal cycles. It continues to support discretionary spending as well as leisure, travel, entertainment and wellness.

Meanwhile, Deloitte’s consumer survey shows that India’s financial well-being sentiment has given mixed signals in recent quarters, registering a slight uptick in September after a decline in the previous month, indicating rising comfort in many financial health indicators.

For example, when asked if they were confident about making upcoming payments, 81% of consumers agreed that they were; This was up 3% from the previous month and the previous year. Similarly, 62% said they felt confident about making large purchases; This rate increased by 3% monthly, but decreased by 1% compared to the previous year.

The survey found that 78% of respondents said their financial situation was at the same level as last year, while 59% said they could afford to spend on things that bring them pleasure; This means an increase of 1% compared to the previous year. 57% of consumers surveyed were satisfied with the amount of money saved; This was 2% less than a year ago.

Households remain value-conscious and savings levels remain high, indicating consumers are spending selectively rather than impulsively, Deloitte said.

Softening in food inflation

One of the most important factors supporting consumer confidence is the decline in food inflation. Deloitte’s India Food Frugality Index fell to its lowest level in two years in the September quarter; This suggests that households feel less constrained in spending on food.

21% of respondents said they only buy essential groceries, down 3% from a year ago; While 9% purchased lower-cost materials, this was 1% lower than the previous year.

The survey showed that urban Indians’ vehicle purchasing intentions increased in the July-September period, driven by the strong trend in September. This index reported an increase of 6.6 points compared to a year ago.

India’s retail inflation fell to 1.54% in September, its lowest level since June 2017, from 2.07% in the previous month. Food inflation in India increased from (-)0.64% in August to (-)2.28% in September. In addition to the base effect, the decline in vegetable and pulse prices also helped bring down headline inflation. Food constitutes approximately 40 percent of the inflation basket.

Retail inflation is expected to fall since November last year and recent GST reforms are expected to further ease prices and boost growth, the report said.

Demand triggers

The timing of festivals, where large expenses are often involved, is important. “Usually, when Diwali falls in the first week of the month, it is observed that the festive season is stronger as salaried consumers have newly credited income. Although Diwali falls in the second half of the month, this year the market continues to reflect strong positivity and optimism,” said Manoj Verma, chief operating officer, Bikaji Foods International Ltd.

Diwali will be celebrated on October 20-21 this year.

“So far the festive business has performed very well for us. This is reflected in primary sales, secondary movements and strong sales from retail shelves. We expect growth in the festival business to be in the high teens,” Verma added.

Electronics retailer Vijay Sales said the first half of September was a bust, with sales picking up only after September 22, when the new GST rates came into effect. The retailer cited the benefits of lower tax on devices such as televisions and air conditioners, with GST rates dropping from 28% to 18%.

“We have more or less covered up the sales loss in early September because we saw a huge increase in the nine days of Navratri (from September 22),” said Nilesh Gupta, managing director of Vijay Sales.

Gupta said that after the GST cuts, the demand for 43-inch television screens increased and exceeded the demand for 32-inch television screens. He said air conditioners were still delayed due to cold temperatures in north India.

Sales of home appliances such as air conditioners and refrigerators faced weak sales in the June quarter due to unseasonal rains that lowered summer temperatures. The retailer expects a growth of 15-20% compared to last year’s Diwali, with the biggest growth expected to be in large TVs and laptops.

Indians are more worried

The Deloitte report noted that although concerns over price inflation have eased, anxiety among Indians continues to remain above the global average. It was also noted that although the overall level of anxiety has been significantly lower since 2022, it is slightly higher than in September last year.

The anxiety is largely due to uncertainties regarding employment in the country.

“Overall anxiety is falling, but work-related concerns are up 7% year-on-year, indicating employment uncertainty that may limit short-term spending, especially non-essential expenses, and encourage more acute value for money behavior. Apart from a slight increase last month, anxiety levels have begun to decline since March (20)25,” the survey said.