Sunil Kataria and Manoj Kumar

NEW DELHI, (Reuters) – Rising prices in India have cast a shadow over this year’s Diwali celebration of lights for Suman Milind from Delhi.

Due to rising fuel costs, transport, and other manufactured goods, and stagnant incomes from the pandemic, 33-year old homemaker is trying to tighten her belt and change her spending habits.

We used to be able to buy four or five boxes dry fruits at festivals. Now we only get one or two. Milind explained that the high cost of food has led to her family cutting down on their meat consumption to only once per week, as opposed to many times each week.

Millions upon millions of Indian households face similar financial strains in the lead up to Diwali. The festival falls in November this year and is one of the most popular shopping seasons for consumer goods.

A half-dozen people Reuters talked to said that many will forgo big-ticket purchase of jewellery or television sets during the festive season. A survey done by Axis My India (based in Mumbai) also revealed that this could lead to a slowdown in an economy still recovering from COVID-19’s worst effects.

According to economists, pump prices for diesel and petrol are almost 35% higher than a year ago, while cooking gas is up more than 50%. These increases have severe consequences for more than three quarters (73%) of households.

Sultan Singh Tomar 53 years old, supplies kitchenware and incense sticks in New Delhi via his scooter. “The skyrocketing costs of petrol and cooking fuel are unbearable.”

His petrol bill increased 600 rupees ($8) over a previous year, and he said that refilling his cooking gas tank was more expensive at 400 rupees.

Tomar is just one of the millions of informal workers who saved during the pandemic, but are now having to reduce household spending.

India’s inflation on the basis of consumer price has remained at 6% for months, largely due to the rise in food prices.

The September consumer price index fell to 4.35 percent due to an increase in food prices, which account for nearly half the index. According to economists, this picture was better than the reality for households.

Axis My India’s October survey on consumer spending showed that 88% said they won’t be purchasing air conditioners or washing machines this festival season. Nearly half of those surveyed said they would buy clothes and less expensive items such as jewellery.

The government of Prime Minister Narendra Modi cannot do much to ease the suffering as world oil prices reached a record high of $85 per barrel. This is putting more pressure on India, which imports almost 80%.

Chief economist of industry chamber Confederation of Indian Industries Bidisha Ganguly stated that the federal and state governments need to reduce fuel taxes. Higher fuel prices pose a threat of inflationary pressures in the medium-term.

She said that corporate earnings would be affected in those sectors where the producers cannot pass on cost increases. This was due to global shortages, which had already pushed up many product commodity prices.

FOOTFALLS REDUCED

Private economists have warned that annual wholesale-price-based inflation – a proxy for producers’ prices – staying in double digits for sixth months in a row could further fuel inflationary pressures as companies pass on rising costs to consumers.

Some retailers already stated that rising raw material prices were affecting their sales.

Kawaljit Singh said that sales of utensils are now less than half what they were during festivals. He sells them from Chandani Chowk, an old Delhi quarter shop.

According to him, the rise in metal prices like steel had caused an increase in prices for utensils and cookers as well as festival lighting, gift items, and other products, by 15-20% over the past four-five month.

Lalit Vats, an auditor based in Delhi said that his family was reducing their brand products due to rising market prices. He also visited wholesale markets looking for bargains.

His mother Anita Vats lamented, “Government may talk about decreasing inflation but the people know that every item’s costs have gone up.”

($1 equals 75.0900 Indian rupees).