Consumers Reevaluate Spending Amid Rising Inflation and Labor Market Concerns

Indian Consumers Turn Defensive Amid Geopolitical Tensions

Indian consumers have become increasingly focused on financial security as geopolitical tensions continue to escalate, according to a report by market research firm Kantar India. The State of the Nation consumer sentiment study found that only 48 percent of consumers expect the economy to improve in 2026, a significant decline from 60 percent in January.

Concerns around layoffs have also increased, with 41 percent of consumers worried about job losses in May, up from 36 percent in January. Despite remaining resilient, Indian consumers are becoming noticeably more cautious as economic and geopolitical uncertainty rises.

The report highlights a shift in consumer sentiment since the first wave of the study in January, ahead of the Union Budget 2026. Consumers were initially balancing optimism with caution, but escalating geopolitical tensions, concerns about a global economic slowdown, and rising anxieties around employment have intensified pressures on households.

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Expectations around personal financial growth have also moderated, with 61 percent of consumers expecting their savings and investments to either remain the same or decline compared to 2025. Only 39 percent expect them to increase. Future financial preparedness is emerging as a major concern, with 71 percent of consumers worried about meeting rent and loan EMI commitments and 80 percent concerned about managing rising living costs.

Amidst this, consumers are becoming more circumspect about where and how they spend. Spending intentions across discretionary categories such as dining out, entertainment, shopping, and subscriptions have weakened. Only 53 percent of consumers plan to increase discretionary spending, down from 55 percent in January. Those intending to reduce discretionary spending have increased from 8 percent to 10 percent, while a similar pattern is visible for high-ticket purchases.

The primary drivers of this shift in consumer behavior are inflation (65 percent), the desire to increase savings (48 percent), growing economic uncertainty (45 percent), and concerns around investment returns (42 percent).

As confidence in financial growth softens amid growing concerns around job security, retirement preparedness, and rising living costs, brands have a new challenge ahead. Deepender Rana, executive managing director, South Asia, Kantar, said that brands must demonstrate tangible value, help consumers feel financially confident, and deliver meaningful experiences to succeed in an environment where households are increasingly prioritizing security, certainty, and long-term wellbeing.

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