Onion prices hit 5-year high, expected to drive November inflation higher

Onion prices have increased by 21 per cent in four days, reaching a five-year high of Rs 60 per kg, while potato and cooking oil prices also remain elevated. Experts warn of inflation pressure in Nove

Onion prices have spiked by 21 per cent within four days, reaching a five-year high of over Rs 60 per kg in several markets, which experts suggest may influence inflation figures for November, according to a report by The Economic Times.

 

Alongside onions, the costs of potatoes and cooking oils are expected to remain high this month.

Vegetable prices continue to climb in November

October’s rising trend in vegetable prices has continued in November as well, with a notable increase in onion costs. At Lasalgaon, India’s largest onion market, the price of older onions rose from Rs 47.70 per kg on November 4 to Rs 57.70 per kg on November 7. 

 

Expectations of a bumper kharif harvest have been disrupted by heavy rainfall in September, which affected the quality and delayed the arrival of new onions.

 

The Economic Times quoted Vikas Singh, vice-president of the Horticulture Producer Exporters’ Association saying the rain has impacted both the quality and timely arrival of the crop.

Higher CPI expected due to price hikes

Reserve Bank of India (RBI) Governor Shaktikanta Das noted that October’s Consumer Price Index (CPI) is likely to exceed the 5.5 per cent recorded in September. This increase is attributed in part to rising vegetable prices.

Rising cost of thali due to vegetable price hikes

According to Crisil, the cost of a vegetarian thali surged by 20 per cent and a non-vegetarian thali by 5 per cent in October due to the elevated prices of onions, tomatoes, potatoes, and cooking oils.

 

The news report quoted S Ananadan, an onion trader in Bengaluru, saying that heavy rains impacted onion quality, leading to significant price variation. The price of the new crop “ranges between Rs 10-60 per kg due to quality differences, while the older crop is priced between Rs 60-70 per kg,” he said. Festival closures in various markets also contributed to the shortfall in supply, according to traders.

Fluctuations in tomato prices

Tomato prices surged by about 25 per cent within a week at Pimpalgaon APMC, Nashik, reaching Rs 26 per kg on November 6 from Rs 20 per kg on November 1. However, prices remain significantly lower than the peak Rs 50 per kg seen in early October. In Delhi, prices have reached as high as Rs 48 per kg, with other markets such as Mumbai and Bengaluru showing rates between Rs 20-25 per kg.

 

Rating agency Crisil predicts that while tomato prices may stabilise within November, potato prices will take longer to moderate. The report quoted Pushan Sharma, Director of Research at Crisil Market Intelligence and Analytics, as saying that onion prices may ease with new crop arrivals in the mandis. However, potato prices might take additional time to decline.

 

Market experts forecast that tomato and onion prices should start stabilising within 10-15 days as supply conditions improve, the report said.