The spending season: What Diwali reveals about India's consumer mood

As the country prepares for the Diwali festival, credit card swipes, UPI transfers and gold sales from previous years reveal how people feel about their wallets and their future

As festive bazaars light up across India, the glow is not only cultural, it is economic as well. Diwali has long served as an unofficial barometer of sorts to measure consumer sentiment, offering a real-time measure of how the country spends, saves and aspires. For policymakers and market watchers alike, it is the season when spreadsheets meet the shop floors.

 

Surge in credit-driven spending 

Credit card data remains one of the clearest indicators of festive confidence. In October 2024, credit card spending touched ₹2.02 trillion, up 14.5 per cent from September and 13 per cent higher than the same month the previous year. October 2023 had shown a similar festival-driven lift, when spending rose 25 per cent over the previous month to ₹1.78 trillion.

   

However, by November 2024, spendings had dropped 16 per cent month-on-month to about ₹1.7 trillion, highlighting how festival purchases create short-lived but sharp spikes in consumption. The October figures, nonetheless, underline that consumers were willing to leverage credit, signalling confidence in income stability and liquidity access.

 

Digital payments mirror mass consumption 

While credit cards capture big-ticket buys, UPI reflects the broad base of everyday spending. Between January and November 2024, the platform processed over 15,500 crore transactions worth ₹223 trillion, according to Ministry of Finance data. In October alone, UPI hit a record 16.6 billion transactions, a 37 per cent rise year-on-year, a sign of festive uptick activity.

 

In the first half of 2024, UPI volumes had already grown 52 per cent year-on-year, with transaction values up 40 per cent. The festival surge reinforced how digital payments now underpin India’s consumption engine, extending well beyond metros to smaller towns and semi-urban markets.

 

Premium aspirations meet value caution 

Meanwhile, the Indian shopper of 2024 walked a fine line between aspiration and restraint. Consumers showed a bias towards premium products, especially in FMCG and home appliances, while keeping a close eye on affordability.

 

Gold reflected this duality more accurately. Prices touched historic highs in October 2024, with 10 grams of 24-karat gold averaging around ₹80,600 in major cities. Despite the surge, jewellers reported that while sales volumes fell 5-27 per cent, overall transaction values rose more than 20 per cent from the previous year. Many buyers opted for lighter ornaments or coins, keeping the festive sentiment alive while adjusting to record prices.

 

Rural versus urban demand 

However, the divergence between rural and urban demand continues to shape India’s consumption cycle. As rural incomes often improve post-harvest, it leads to growth in FMCG and durables. Last year, retailers and e-commerce firms saw healthy traction in smaller towns, suggesting festive optimism is expanding beyond metros.

 

Yet, urban consumers still make up for most big-ticket purchases like automobiles, premium electronics, and jewellery. This indicates that a more urban-driven festive cycle might not holistically point towards the status of rural demand.

 

Auto sector boosts during festive season 

In October last year, India’s festive season had brought cheer to the automobile market, with retail auto sales rising about 12 per cent year-on-year during the 42-day period from early October to mid-November. Around 4.29 million vehicles were sold, up from 3.84 million in the same period last year.

 

Two-wheelers led the charge, clocking nearly 3.31 million units, a 14 per cent increase, driven largely by strong rural demand. Passenger vehicle sales had also moved up by about 7.1 per cent to 603,000 units, helped by pent-up demand and festive discounts.

 

October 2024 had turned out to be a record month for the industry, registering the highest-ever passenger vehicle sales for any October at 393,238 units.

 

And now in the run-up to Diwali 2025, the sector is already showing early signs of strength due to GST rates revision. Auto sales rose 5.2 per cent year-on-year in September this year, aided by tax incentives and festive discounts. 

 

Test of sentiment and sustainability 

E-commerce sales during the 2024 festive period were estimated at $11.9-12 billion (nearly ₹1 trillion), marking a 23 per cent increase over the previous year.

 

FMCG categories, particularly packaged foods, sweets and decorations, recorded 8-12 per cent growth. In tier-2 cities, staples such as rice, pulses, ghee and edible oils saw sales rise by as much as 30 per cent. The pattern suggests that festive spending remains broad-based, even as preferences shift between luxury and necessity.

 

The previous year festive spending trends do provide an insight into the broader economy and consumption patterns as each October, we cycle through the same flow with credit spending growing, digital payments increasing, and gold and auto sales highlighting the emotional and aspirational aspects of consumer spending.