Diwali sweet boxes faces inflation bite as sugar prices surge 30%

As Diwali approaches, brightly colored sweet boxes fill shops and homes throughout India, a tradition steeped in ritual. However, this year marks an expensive celebration, as sugar, a key ingredient, has surged nearly 30% compared to the previous year. Other components, such as refined cooking oil, raisins, and nuts, have also seen substantial price increases, far exceeding the country's overall inflation rate.

In central New Delhi, sweet shops are bracing for a busy period leading up to Sunday, when most Indians will observe the festival. Despite the rising costs, shop owners have managed to keep price hikes below 10%, though Varjesh Aggarwal, a 58-year-old manager at a 1937-established Delhi sweet shop, admits that ingredient prices have impacted his business.

Nationally, sweet prices are up over 9%, a significant burden for India, which consumes the most sugar globally and is the second-largest producer. The government has responded with measures like duty-free raw sugar imports, import restrictions, and ethanol production bans, but these have been counterbalanced by a rainfall deficit threatening sugar-cane production.

For sweetmakers, the challenge lies in passing on costs during their busiest season or accepting lower margins. Shop staff and customers have noticed the price hike, with some even questioning if they're receiving less value for their money. Economists predict a 6.1% inflation rate for the last quarter of the year, with grocery prices likely to be higher.

This suggests the inflationary impact of Diwali sweets will persist well into the fall, as sugar demand remains high through the end of the year.