Onion prices have surged by 21% in just four days, climbing to a five-year peak above Rs 60 per kg in several markets. Experts believe this sharp rise could impact November’s inflation rates. In addition, prices for potatoes and cooking oils are also anticipated to stay elevated throughout the month.
Vegetable prices continue to climb in November
The upward trend in vegetable prices seen in October has extended into November, with onion prices experiencing a sharp rise. At Lasalgaon, the largest onion market in India, the cost of aged onions increased from Rs 47.70 per kg on November 4 to Rs 57.70 per kg on November 7.
Heavy rainfall in September disrupted expectations of a strong kharif harvest, impacting the quality of the crop and delaying the arrival of fresh onions.
Higher CPI expected due to price hikes
Reserve Bank of India (RBI) Governor Shaktikanta Das highlighted that the Consumer Price Index (CPI) for October is expected to surpass the 5.5 percent level seen in September. This anticipated rise is largely due to increasing vegetable prices, which are putting upward pressure on inflation.
Rising cost of thali due to vegetable price hikes
October saw a steep rise in the cost of thalis in India, with vegetarian thalis going up by 20% and non-vegetarian thalis by 5%, primarily due to soaring prices of key ingredients like onions, tomatoes, potatoes, and cooking oils.
An onion trader from Bengaluru, attributed this increase to recent heavy rains that affected onion quality, resulting in wide price variations. He noted that the price of the new onion crop fluctuates from Rs 10 to Rs 60 per kilogram depending on quality, while older onions are priced between Rs 60 and Rs 70 per kilogram. Additionally, traders highlighted that the festival season closures in some markets have contributed to supply shortages.
Fluctuations in tomato prices
Tomato prices have climbed roughly 25 percent within just a week at Pimpalgaon APMC in Nashik, rising from Rs 20 per kg on November 1 to Rs 26 per kg on November 6. Despite this recent increase, the prices remain notably lower than the early October peak of Rs 50 per kg. In Delhi, prices have reached up to Rs 48 per kg, while Mumbai and Bengaluru markets report prices in the range of Rs 20-25 per kg.
Tomato prices may level out by the end of November, although potato prices are likely to take longer to stabilize. Pushan Sharma, Director of Research at Crisil Market Intelligence and Analytics, noted that onion prices might ease as new supplies enter the market, while potato prices are expected to remain high for a bit longer.
Market analysts expect tomato and onion prices to start settling within 10-15 days as supply improves, the report suggests.
