Urban Spending Falls 4 Per Cent As Rural Households Drive Consumer Spending Growth

Household spending patterns in India are showing a sharper rural-urban divide, with rural households driving growth while urban consumers cut back, according to Worldpanel’s fourth annual Kharcha report.

Urban household expenditure on FMCG products fell four per cent year-on-year in the first quarter of FY27. This marks a sharp change from the 14 per cent growth recorded in the previous year. Rural household spending, in contrast, rose 15 per cent to Rs 53,760 during the quarter.

The average quarterly household expenditure stood at Rs 59,857, 13 per cent higher than the previous year. Rural households accounted for the growth, while urban spending declined.

Urban Households Cut Back On Everyday Spending

The fall in urban expenditure was visible across income groups. Affluent urban households, with average quarterly spending of Rs 81,759, recorded a four per cent decline. Less affluent urban households, whose average quarterly expenditure was Rs 49,832, also registered a four per cent fall.

The report also found a change in the composition of household spending. Groceries accounted for 22 per cent of the household wallet, down from 23.5 per cent a year earlier. Consumer durables, meanwhile, accounted for around 6 per cent, compared with less than two per cent previously.

Rural Growth Faces Fresh Pressure

The stronger rural spending trend may also face challenges. Higher borrowing for consumer durables has added equated monthly instalment (EMI) commitments for some rural households, while uneven monsoon conditions could affect rural incomes and spending.

Essentials Take Priority As Budgets Tighten

Spending behaviour also points to greater caution among shoppers. About 86 per cent of consumers surveyed reported buying only essential items during grocery shopping, while 74 per cent reported sticking to a budget. The latter figure was 69 per cent a year earlier.

Fuel and gas price fluctuations were the biggest global concern for 59 per cent of households. Around 64 per cent reported changing their spending or shopping habits because of such concerns, while 48 per cent were cutting non-essential purchases.

The study was based on feedback from around 6,000 urban and rural households and was conducted in April 2026.