City spending is predicted to witness a broader revival by way of the third quarter of monetary yr 2026 (FY26), with discretionary classes comparable to jewelry exhibiting resilience and supply-side disruptions steadily easing. After a sluggish first half of FY26, city consumption is exhibiting indicators of revival, in keeping with market intelligence agency Motilal Oswal.
“With discretionary classes like jewelry gaining momentum and provide disruptions easing, we anticipate city spending to revive in 3QFY26,” the report mentioned.
The restoration, which started in late September 2025, has sustained momentum by way of October, whilst elevated gold costs didn’t dampen client urge for food for valuable metals.
City consumption–tracked by way of 9 proxy indicators–grew 4.7 per cent year-on-year (YoY) within the second quarter of monetary yr 2026 (2QFY26), down from 5.9 per cent in 1QFY26 and barely beneath the 4.6 per cent seen in 2QFY25.
For the primary half of FY26, spending progress averaged 5.3 per cent, in comparison with 5.8 per cent in the identical interval final yr, underscoring a light slowdown in city demand, the report added.
The report additional added that the deceleration was largely pushed by weaker actual wage and wage progress amongst BSE500 corporations, slower actual home value appreciation, and a contraction in passenger automobile (PV) gross sales.
Actual salaries and wages rose 2.4 per cent in 2QFY26, down from 4.1 per cent within the earlier quarter, whereas actual home costs inched up simply 0.2 per cent–the slowest progress in eight quarters.
Including to the softness, PV gross sales declined 1.5 per cent YoY, marking a second straight contraction after regular good points by way of FY24-25. Analysts attribute this dip to buy deferments forward of the festive season, a excessive base impact, and waning discretionary spending.
On the constructive facet, petrol consumption, private credit score, and non-farm imports remained agency, signalling underlying resilience in city financial exercise. Actual private credit score progress, whereas moderating to eight.7 per cent YoY, has stabilised in latest quarters, reflecting a normalisation in client borrowing after the post-pandemic surge.
