Urban Spending Set for Revival in Q3 FY26 Amid Easing Supply Disruptions

Urban Spending Set for Revival as Discretionary Categories Show Resilience

New Delhi, November 8 (ANI) — Urban spending in India is poised for a significant revival in the third quarter of the financial year 2026 (FY26), driven by a resurgence in discretionary categories like jewelry and easing supply-side disruptions, according to a recent report by market intelligence firm Motilal Oswal.

After a lackluster first half of FY26, urban consumption is beginning to show promising signs of recovery. The report highlights that this revival, which commenced in late September 2025, has continued to gain momentum through October, despite elevated gold prices not dampening consumer enthusiasm for precious metals.

“With discretionary categories like jewelry gaining momentum and supply disruptions easing, we expect urban spending to revive in 3QFY26,” the report stated.

Urban consumption, tracked through nine proxy indicators, recorded a growth of 4.7% year-on-year (YoY) in the second quarter of FY26, a decline from 5.9% in the first quarter and slightly below the 4.6% seen in the same quarter last year. For the first half of FY26, spending growth averaged 5.3%, down from 5.8% during the same period last year, indicating a mild slowdown in urban demand.

The report attributes this deceleration to several factors, including weaker real salary and wage growth among BSE500 companies, slower real house price appreciation, and a contraction in passenger vehicle (PV) sales. Real salaries and wages saw a growth of only 2.4% in the second quarter, down from 4.1% in the previous quarter, while real house prices increased by a mere 0.2%, marking the slowest growth in eight quarters.

Adding to the challenges, PV sales declined by 1.5% YoY, marking a second consecutive contraction after steady gains in FY24-25. Analysts suggest that this dip is due to purchase deferments ahead of the festive season, a high base effect, and a general decline in discretionary spending.

On a brighter note, petrol consumption, personal credit, and non-farm imports have remained robust, signaling underlying resilience in urban economic activity. Real personal credit growth, while moderating to 8.7% YoY, has stabilized in recent quarters, reflecting a normalization in consumer borrowing following the post-pandemic surge.

As urban consumers navigate these economic fluctuations, the upcoming festive season may provide a crucial boost to spending, particularly in discretionary categories. The market will be closely watching how these trends unfold in the coming months.

(The above story is verified and authored by ANI staff, ANI is South Asia’s leading multimedia news agency with over 100 bureaus in India, South Asia, and across the globe. The views appearing in the above post do not reflect the opinions of LatestLY.)