From crude to monsoon risks: Indian consumer demand splits under inflation pressure

Subscribe to enjoy similar stories.MUMBAI: India’s consumer demand is showing clear signs of softening, with inflation pressures amid volatile crude oil prices and a weak monsoon outlook beginning to weigh on spending across categories. While the slowdown is not uniform, the underlying direction is increasingly evident in sentiment and early consumption data from the March quarter (Q4FY26).The weakness is most visible in a widening split across income groups.

Lower-income households are cutting back under pressure from essentials inflation, while higher-income consumers are turning more cautious on expectations despite stable current incomes—together pointing to a broad-based but uneven cooling in demand.Data from the Centre for Monitoring Indian Economy (CMIE) shows the Index of Consumer Sentiment (ICS) edged down 0.2% in March, snapping February’s 2.6% gain. While the headline change appears marginal, underlying trends show a widening divergence across income cohorts.Lower-income households—earning under ₹1 lakh annually—saw a sharp deterioration in conditions.

Their Index of Current Economic Conditions fell 15% in March, nearly reversing a 20% rise in February. Economists attribute this to the ₹60 hike in liquefied petroleum gas (LPG), or cooking gas, cylinders, which squeezed the budgets of India’s most vulnerable consumers.“When the cost of daily sustenance spikes and access to essentials like LPG becomes uncertain, the overall sentiment tends to turn negative,” said Madan Sabnavis, chief economist at Bank of Baroda.At the other end of the spectrum, sentiment is softening on expectations rather than current income stress.