On Saturday, the government implemented a 40% export duty on onions, effective immediately. The purpose behind this action is to curb the increase in prices and enhance the availability of onions within the domestic market. This export duty regulation will remain in effect until December 31, 2023.
According to information from the consumer affairs ministry, the nationwide average retail cost of onions stood at INR 30.72 per kilogram on Saturday. The price range varied, reaching a maximum of INR 63 per kilogram and a minimum of INR 10 per kilogram. In a report dated August 4, credit rating agency Crisil had issued a cautionary statement, drawing parallels with the tomato market, and suggesting that retail prices for onions could potentially reach INR 60 to 70 per kilogram by the end of the month.
Onion prices have maintained an upward trajectory throughout this month, and experts are indicating that there is a likelihood of further price increases as we move into September.
Surpassing previous records, the government has successfully acquired 2.50 lakh tons of onions for the buffer in the fiscal year 2022-23. Nevertheless, despite the substantial onion stock within the country, a significant portion of poor-quality onions resulting from an extended period of intense summer heat this year has led to an increase in the cost of superior-grade onions.
Simultaneously, onion exports surged by 64%, reaching a six-year peak at 25.25 lakh tonnes during the fiscal year 2022-23.
In July, India experienced a significant surge in its annual retail inflation, reaching a 15-month peak of 7.44%, in contrast to the previous month’s 4.87%. This increase was propelled by a notable upswing in vegetable and cereal prices. These figures surpassed the upper boundary of the Reserve Bank of India’s inflation target range of 2% to 6%, marking the first instance of such breach in the last five months.
Recent high-frequency data on food prices in August indicates ongoing price hikes for cereals and pulses this month, as reported in the bulletin. The Reserve Bank of India (RBI) also noted that average tomato prices experienced a further rise; however, more recent data suggests a slight decline in prices.
In its August bulletin, the Reserve Bank of India (RBI) stated that there were successive increases in the prices of onions and potatoes.
Previously, SnackFax reported that prices of premium-grade onions commonly used by households are expected to nearly double, reaching INR 55-60 per kilogram by September, as quoted from traders.
Read More: Quality onion prices poised to double by September amidst supply concerns
They mentioned that despite the abundant onion stock within the country, a significant quantity of poor-quality onions resulting from an extended period of excessive summer heat this year has led to an increase in the cost of high-quality onions.
In addition to the substantial quantity of subpar onions, traders explained that elevated inflation in various other vegetables is also contributing to driving up onion prices.
