NEW DELHI: In the midst of the festive season, edible oil prices have spiked, with palm oil prices rising as much as 37% in the past one month, heaping pressure on household budgets and making it expensive for restaurants, hotels and sweet shops which use the oil for preparing popular snacks.
The price of mustard oil, used in several households, has surged by 29% in one month. The spurt in oil prices came at a time when retail inflation jumped to a nine-month high of 5.5% in Sept, led by high vegetable and food prices, dashing hopes of a cut in interest rates by the RBI for now.
The prices of a large chunk of edible oils have soared after govt increased import duty on crude soybean, palm and sunflower oils last month. What has added to the price rise is a significant increase in global rates in the past one month. Govt increased the import duties on crude palm, soybean, and sunflower to 27.5% from 5.5% and duty on refined edible oil has also been raised to 35.7% from 13.7% effective from September 14. These constitute the major chunk of the country’s edible oil import basket.
Officials said the global prices of crude palm, soybean, and sunflower have risen by approximately 10.6%, 16.8%, and 12.3% since last month. India meets around 58% of its edible oil demand through imports. India is the second-largest consumer of edible oil and the biggest importer of vegetable oils.
Sources said consumers will have to live with higher prices for the next few months as there is hardly any chance of reducing import duty. Govt had earlier said, “These adjustments are part of the govt’s ongoing efforts to bolster domestic oilseed farmers, especially with the new soybean and groundnut crops expected to arrive in markets from October 2024.” Even industry sources said farmers need to get a good price for oilseeds, and for that, the current regime of import duty needs to continue.
The rise in global prices of key edible oils has come as a surprise, impacting the prices of all cooking oils. Govt had said the duty hike was done considering several factors such as increased global production of soybean, oil palm, and other oilseeds; higher global ending stocks compared to last year; and falling prices due to surplus production.
B V Mehta, executive director of SEA, said while the immediate price rise seems significant, there has been very little change if seen across the past few years. “If we want to make ourselves self-sufficient in edible oil, we have to encourage farmers to bring more areas under oilseeds. That will happen only when farmers get good prices for years and we don’t go for excess import of oil.”