MUMBAI, April 22 -- India's consumer demand is showing clear signs of softening, with inflation pressures amid volatile crude oil prices and a weak monsoon outlook beginning to weigh on spending across categories. While the slowdown is not uniform, the underlying direction is increasingly evident in sentiment and early consumption data from the March quarter (Q4FY26). The weakness is most visible in a widening split across income groups. Lower-income households are cutting back under pressure from essentials inflation, while higher-income consumers are turning more cautious on expectations despite stable current incomes-together pointing to a broad-based but uneven cooling in demand. Data from the Centre for Monitoring Indian Economy (CMIE) shows the Index of Consumer Sentiments (ICS) edged down 0.2% in March, snapping February's 2.6% gain. While the headline change appears marginal, underlying trends show a widening divergence across income cohorts. Lower-income households-earning under Rs.1 lakh annually-saw a sharp deterioration in conditions. Their Index of Current Economic Conditions fell 15% in March, nearly reversing a 20% rise in February. Economists attribute this to the Rs.60 hike in liquefied petroleum gas (LPG) cylinders, following high fuel costs amid the conflict in West Asia, which squeezed the budgets of India's most vulnerable consumers. "When the cost of daily sustenance spikes and access to essentials like LPG becomes uncertain, the overall sentiment tends to turn negative," said Madan Sabnavis, chief economist at Bank of Baroda. At the other end of the spectrum, sentiment is softening on expectations rather than current income stress. Affluent households, with annual earnings of at least Rs.10 lakh, reported a 6% decline in the Index of Consumer Expectations, marking a third consecutive month of moderation. Only 40% now expect business conditions to improve over the next year, down from 52% in February. This is the lowest level of optimism since the twin shocks of stubborn inflation and El Nino in 2024. "Anxiety around job security, stagnant hiring, and the threat of 'imported' inflation are weighing on affluent minds," Sabnavis said. "Since their real incomes remain largely intact, the pullback in their sentiment appears precautionary rather than a response to immediate financial stress." Nearly 11% of affluent households now expect conditions to worsen, marking the highest negative reading in 18 months, according to Mint's analysis of CMIE data. The divergence in sentiment is also visible in spending behaviour, where households are increasingly prioritizing essentials and substitutes over discretionary purchases. Big-ticket durables saw a pause in intent, with fewer households viewing March as a favourable time to buy consumer durables compared with February, CMIE data showed. Yet within categories, demand shifted toward lower-ticket substitutes. Sales of small kitchen appliances such as induction cookers, ovens and kettles surged as households adjusted to last month's LPG constraints....