OPINION | Soaring prices: How urban Indian consumers are reacting to them

The Reserve Bank of India’s Urban Consumer Confidence Survey (UCCS) for September 2026, conducted among 6,054 respondents across 19 major cities, points to a steady erosion of confidence among urban households on several economic indicators.

The share of respondents who say the general economic situation has worsened has risen to 54.5 per cent, the highest since November 2022, and nearly half (49.5 per cent) say the same about employment.

Around 95 per cent of urban households say the price level has risen over the past year, the highest share since July 2022, and 86 per cent say the pace of price increase has itself gone up, the highest since March 2023.

Across the seven survey rounds since September 2025, the share of households reporting higher inflation has risen almost in step with measured urban inflation (Table 1). In the RBI’s Inflation Expectations Survey of Households, the median household perceived current inflation at 8.4 per cent in September 2026, about 3.5 percentage points above the measured urban inflation of 4.9 per cent. The survey shows the gap has narrowed, from 5.4 percentage points in September 2025 to 3.5 percentage points a year later, as actual inflation has caught up with what households were already feeling.

UCCS shows that only 26.1 per cent of urban respondents say their income has increased over the past year, while 51.7 per cent say it has remained the same.

For most urban households, incomes have stood still while prices, food above all, have accelerated, and spending has had to absorb the difference. As many as 83.7 per cent of respondents say their spending has increased, the highest share since June 2018, and 90.1 per cent say spending on essential items has risen, the first time this share has crossed 90 per cent in the survey. Spending on non-essential items, by contrast, is broadly flat, with a net response of just 4.6. Higher spending, in other words, reflects paying more for the same basket, not buying more.

The median household expectation of inflation one year ahead has risen from 8.0 per cent in November 2025 to 10.0 per cent in September 2026, and expectations for the next three months stand at 9.9 per cent. Food is the main worry: 62 per cent of households expect food prices to rise faster than they are now, and 84 per cent of UCCS respondents expect overall prices to rise further over the coming year.

First, urban consumers are not misreading the economy: their sense that inflation has picked up matches the official data in direction, even if they put its level higher. Second, with incomes broadly flat, rising prices translate directly into falling real incomes, and the burden falls most heavily on essentials. For the RBI, the upward drift in household inflation expectations warrants caution. For growth, households that spend more on food and fuel have less left for everything else, a risk for an economy that leans on urban consumption.

The author is faculty at Manipal Institute of Liberal Arts, Humanities and Social Sciences (MILHS), MAHE Bengaluru.

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.