Sharp divide in rural, urban consumption nos

Kolkata: Indian households have entered 2026 on a more cautious footing, with urban consumers pulling back on spending even as rural households continued to increase their outlay, pointing to a sharper divide in consumption trends amid rising household financial pressures.Urban quarterly expenditure declined 4% year-on-year in the first quarter of 2026, reversing a 14% growth recorded in the previous year, according to the fourth annual Kharcha study by Worldpanel by Numerator. The April 2026 study, based on around 6,000 urban and rural households, marks the first time in the study's four-year history that the consumption slowdown has been led by urban India.The pullback was broad-based across income segments. Both affluent urban households, which spend an average Rs 81,759 per quarter, and less affluent households, with average quarterly spending of Rs 49,832, recorded a 4% contraction. Rural household expenditure, in contrast, grew 15%.Also read | India factory activity rebounds sharply in September as demand revives, PMI hits 7-month highThe squeeze is also visible in the composition of household spending. Consumer durables were among the few categories to gain wallet share, helped by favourable GST changes, with rural and less affluent households increasing purchases. However, the rise in durable purchases was accompanied by higher EMI outgo, further tightening short-term disposable income."Consumers are clearly becoming more selective about where their money goes. The data suggests that value, relevance and a strong reason to buy will increasingly matter as households navigate tighter budgets. Essentials are being protected, while discretionary purchases are facing greater scrutiny. Higher EMI outlays makes short term disposable spend even tighter. For brands, the opportunity lies in demonstrating clear value beyond price," said Manoj Menon, Director-Commercial, Worldpanel Division.Also read | India can't take growth for granted, FinMin warns as global rates rise and investors turn cautiousGrocery spending also came under pressure. All-India quarterly grocery expenditure fell 1% to Rs 13,127, after growing 10% in the previous year. Rural grocery spending declined 5%, although dairy and fresh produce remained relatively resilient, suggesting that households are continuing to protect essential everyday consumption while cutting back elsewhere.The shift towards necessities is reflected in Worldpanel's Category Importance Score, which measures how essential a category is to shoppers. LPG recorded the highest score at +33, followed by mobile internet at +28, cooking oil at +25, fresh produce at +24 and fuel at +22.Much of the increase in spending on these categories, however, appears to be driven by higher costs rather than increased consumption. Among households spending more, 89% attributed the rise in LPG expenditure purely to higher prices, while 73% cited rising costs for both mobile internet and fuel.At the same time, households are trimming convenience-led and discretionary consumption rather than abandoning such categories altogether. Purchases of noodles, milk food drinks, packaged juices, cheese and salty snacks declined in frequency, with consumers citing budget constraints and, in some cases, health considerations.The pressure is also showing up in how households perceive their financial situation. Only 16% said they were living comfortably, down sharply from 28% in December. While 28% described themselves as struggling, the largest share, 56%, said conditions were tougher than earlier but they were still managing.External cost pressures are adding to the caution. Energy price volatility was cited as the leading global concern by 59% of households. Rising fuel prices worried 82%, while 61% were concerned about higher food and grocery prices. Some households also reported difficulty accessing cooking gas, prompting them to restrict usage or shift towards alternative fuels and electric appliances.The near-term outlook has weakened further. The proportion of households expecting conditions to worsen over the next three months doubled to 18% from 9%, while only 23% expected conditions to improve.The findings point to a consumer who is still spending, but with a sharper focus on necessity, affordability and value, as higher living costs and EMIs leave less room for discretionary purchases.