YouGov’s Diwali Spending Index shows the highest ever spending propensity since the pandemic

As the country puts behind the worst of the pandemic and moves into the much-awaited festive season, brands prepare for the biggest marketing opportunity of the year. Although brands are optimistic, are consumers ready to shop again?

Ever since the pandemic, YouGov’s Diwali Spending Index has been tracking the purchase intent of consumers during the Diwali season. This year’s data reveals a spending propensity of 94.45 among urban Indians, up from 90.71 in 2021, and 80.96 in 2020, highlighting a rapid road to recovery.

The Index was calculated as a weighted impact of 10 factors (like increase in gross household income, increase/decrease in household expenses, intent to invest or splurge, and general optimism towards the economy) on their intent to spend more/less this Diwali season versus last.

Among the 10 factors, one of the key drivers for people to spend more this year is their anticipation of the festival. More than a third (35%) agreed with the statement “I am looking forward to Diwali this year since the rest of the year has been quite dull because of Covid-19.

Furthermore, nearly three in ten (27%) urban Indians agreed that they feel optimistic about the economy in general. This optimism reflects in their personal life as well as another 27% claim their gross household income is higher today than it was a year ago, up from 19% who said this last year. With urban Indians appearing to be in a better position to spend this year, these factors could likely be pulling up the overall sentiment to spend more this Diwali as compared to last.

Even though there is an improvement, the biggest barrier to spending continues to be the fear of the uncertain. Just as many as those who in 2021 said they are more careful with their finances today than they used to be in the past agreed with the statement this year as well.

Having said that, there is excitement among the public and 36% of urban Indian respondents said they are likely to spend more than last year during Diwali in 2022. This is significantly higher than in the past years, when 29% and 17% were willing to spend more during Diwali in 2020 and 2021, respectively.

As data from YouGov’s Diwali Spending Index shows, there is a significant year-on-year improvement in spending intent since the pandemic and this is good news for brands. In the months to come, YouGov’s festive series will reveal the influence of upcoming seasonal events and festivals on consumers’ buying sentiment. With strategic insights and timely planning, brands can leverage their campaigns and hit the jackpot this festive season.

Methodology:

This survey has been conducted on a sample of 2056 respondents on YouGov India’s online panel in August 2022. The sample primarily constitutes consumers from NCCS A and B; and matches the population numbers of urban India in terms of basic demographics like age, gender, regions, and city tiers.

The Index is calculated as a weighted impact of 10 factors (like increase in gross household income, increase/decrease in household expenses, intent to invest or splurge, and general optimism towards the economy) on their intent to spend more/less this Diwali season versus last.

The Index has been derived using Ordinal Logistic Regression and Johnson’s Relative Weight modeling to understand the relationship between each of the factors and the overall intention to spend more this Diwali amongst consumers.

For the calculation of the final Index, two sets of weighted averages were calculated basis respondent data – 1) assuming an equal weightage for all factors (which has been used as the base); 2) with actual weights for each of the factors derived from the regression and JRW analysis.

The final Index = Actual weighted spending intent / Hypothetical spending intent assuming equal weightage to all 10 predictors