As brands prepare for the upcoming festive season, YouGov’s Diwali Spending Index reveals a spending propensity of 96.43 among urban Indians.
This year’s data reveals a slight increase in the spending propensity from last year (94.45 in 2022), highlighting a somewhat similar enthusiasm among consumers.
The index was calculated based on 9 factors like increase in gross household income, increase/decrease in household expenses, intent to invest or splurge, and general optimism towards the economy.
Among the 9 factors, the attribute which seems to have the highest weightage on the score is the increased household income. Almost a third of urban Indians (32 percent) agreed with the statement, “My gross household income is higher today than it was a year ago” – an increase from 22 percent who said this last year.
Furthermore, nearly three in ten (27 percent) agreed that they have more savings today than a year ago. Having said that, the number of people who claim their household expenses have gone down since last year has decreased from 20 percent in 2022 to 15 percent in 2023.
Although urban Indians appear to be in a better monetary position, the rising cost of living could have had an impact on their spending behaviour. The data shows that three in ten urban Indians (31 percent) said they are likely to spend more than last year during Diwali in 2023, down from 36% who said this in 2022. In contrast to this, a higher number of people said they will spend less during Diwali this year than those who said this last year (26 percent in 2023 vs 21 percent in 2022).
When probed further, a majority of urban Indians (52 percent) claim they have been finding it difficult to meet their monthly expenses in the last three months. Increase in the cost of living due to inflation was stated as the biggest reason for this (as said by 39 percent), followed by increase in cost of living due to other reasons (30 percent).
This has affected spending behaviour, with people postponing or cancelling big spends in the next few months (32 percent) or taking steps to reduce or cut spends on non-essential items (31 percent). Some have used savings (17 percent), while others have borrowed money or taken loans to manage the situation.
As the data shows, although there has been an improvement in net perceptions on income and savings versus last year, with urban Indians trying to battle the rising cost of living, they may be forced to cut down their spending on non-essential items during the upcoming festive season, leading to some adverse impact on retailers and brands.