INDIA CONSUMER : Disruption Diaries 7 - When war meets weather

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INDIA CONSUMER : Disruption Diaries 7 - When war meets weather

Discretionary demand at a higher risk

We see discretionary demand at a higher risk vs demand for staples. Various sectors

have started raising prices to offset cost inflation. Restaurant and food delivery operators

have indicated that higher fuel, LPG and transportation costs could lead to 5-10% price

increases over the coming months, although companies are cautious about passing on

the full impact given the already stressed consumer budgets.

Recent industry commentary and media reports suggest that the recovery in

discretionary consumption could face near-term headwinds amid rising inflationary

pressures following the Iran-US conflict. Higher crude oil prices, elevated logistics costs,

supply-chain disruptions and rupee depreciation are beginning to impact consumer

sentiment across categories, such as electronics, apparel, dining-out, travel and

consumer durables. Companies across the retail, electronics and restaurant industries

have indicated that war-led inflation and rising input costs could lead to further price

hikes, potentially impacting discretionary demand recovery that had started improving

over the past few months.

Broader consumer surveys also point towards a more cautious spending environment.

Deloitte’s latest Consumer Signals India Chapter report highlighted that Indian

consumers are increasingly prioritising essential purchases, delaying large discretionary

spends and becoming more value conscious amid economic and geopolitical uncertainty.

The report noted moderation in big-ticket purchase intent alongside rising concerns

around fuel and utility inflation, suggesting that elevated commodity prices could weigh

on urban discretionary consumption if inflation sustains at current levels.