Deepavali may be the festival of lights, but this year it will be celebrated against the backdrop of a not too bright economic scenario. Spiraling prices, the long-awaited economic recovery and a climate in which retaining a job is more important than bonuses seem to have a lot to convey.

While prices of many essential commodities have been steadily rising, Deepavali-induced consumption has increased the prices of certain commodities ranging from gold to ghee. There is a shortage of milk, says Geeta Padmanaban, owner of a private milk co-operative. “Sweet shops and hotels are buying milk in bulk. Milk meant for household consumption is being diverted to meet this demand.”

The price of milk supplied by private players has risen by Rs.2 in one week. However, Ms. Padmanaban adds that after Deepavali, there will be excess supply and prices will stabilize.

The prices of sugar and other milk products have also gone up in the past week. The wholesale price of a kg of toor dal and onions went up by Rs.6 in the same period, much of it because of the floods in neighboring States. According to S. Chandran, secretary of the Koyambedu Periyar Market Licensed Merchants’ Association, vegetable prices might increase further. But, the floods and the festival around the corner provide only part of the answer. Toor dal prices have doubled in the past three months from Rs.45 to Rs.90. Moong dal prices rose from Rs.36 to Rs.69.

“It is paradoxical,” says K. Nagaraj, professor at the Madras Institute of Development Studies. “Prices are rising at a time when the government has adequate stock of grains. Also, the large foreign reserves and the threat of imports to control prices must act as a dampener on food prices.”

All this is happening at a time when average wage earnings have been steadily dropping, according to Indian Labour Bureau statistics.

But some sections of society have been more insulated than others from the price hikes. “While the Information Technology sector has been hit, cost cutting has led to an increase in sub-contracting which actually might have created jobs. There has also been an overall salary scale revision in the government sector,” says Professor Nagaraj.

“It is the lower middle class working in the unorganized sector and the poor who will be the hardest hit. They won’t have much to celebrate about,” he says.