Inflation could dampen consumers’ spending spirits this Diwali, survey shows

livemint.com:

As high inflation eats into people's purchasing power, fewer urban Indians are planning to increase their spending during the upcoming Diwali season compared to last year. About three in 10 urban Indians (31%) said they were likely to spend more than last year during the festival of lights in 2023, down from 36% in 2022, according to a survey by YouGov India. Moreover, two-thirds of urban Indians (67%) said their household expenses had gone up from a year ago.

The survey was conducted online in July 2023 and had over 2,000 respondents. But this may not be enough to stoke the anxiety of companies that bank on the Diwali festive season to shore up sales of consumer goods. That's because people who plan to increase their spending from last Diwali were still the largest group, followed by 29% who plan to spend the same, and 26% who plan to cut spending.

Also, over half (52%) of respondents said they were looking forward to splurging during the Diwali season. Consumers loosen their purse strings during the festival season for everything from cars and appliances to jewellery, clothes and gifts. However, inflation seems to have dampened sentiment this year.

Although urban Indians appear to be in a better financial position, rising living expenses may dent their spending, the survey indicates. Consider this: most respondents (68%) said their gross household income—total earnings before taxes or other deductions—and savings (55%) were higher today than a year ago. Yet expenses have broadly risen from a year ago.