Edible oil prices up 5-10 per cent, may rise further
The recent hike in import duties on crude and refined edible oils has led to a rise in retail prices of kitchen staples such as mustard, sunflower, and palm oil in India, increasing by 5-10%. India, which imports 58% of its edible oil consumption, faces further inflation as manufacturers turn to domestic procurement, driving oilseed prices above the minimum support price. Industry sources predict a cumulative 15-20% price hike, exacerbating inflation and potentially impacting consumption during the festive season.
Consumers are beginning to feel the pinch of inflation in kitchen staples such as edible oil following the recent hike in import duties announced on crude and refined oil.
According to the Price Monitoring Cell of the Department of Consumers Affairs, the modal or benchmark retail price of mustard, sunflower and palm oil, which are commonly used in Indian kitchens, has appreciated to Rs 148/litre, Rs 129/litre and Rs 110/litre on Tuesday, from Rs 140, Rs 120 and Rs 100, respectively, on September 13. This is an increase of 5-10% since the announcement of the duty hike 12 days ago
But due to the duty hike, the mandi price of soyabean and mustard has risen above the minimum support price (MSP) in the last one week, as edible oil manufacturers will now have to procure from the domestic market versus importing from abroad.
Companies that FE spoke to say that the spike in domestic oilseed prices will stoke inflation further, with the cumulative price hike pegged at 15-20%. This will include the current price hike plus at least one more round of price increases, industry sources said.
Both the government and companies fear an impact on consumption due to the price hikes, prompting the food ministry to urge edible oil makers to maintain the current price of cooking oils till there is availability of imported oil at lower duties.
This week, the Solvent Extractors Association of India, an apex body of edible oil makers, told its members to avoid increasing the price of older stocks and maintain the retail price during the festive period.
“The buffer stocks will last for about a month-and-a-half. Beyond that, edible oil companies may not be able to hold price lines as seed prices remain elevated due to the import duty hike,” a senior executive with an edible oil company said. He declined to be quoted due to the sensitivity of the issue.
While import duties have been hiked for palm, soybean and sunflower oils, which the country imports in substantial quantities, retail prices of mustard oil have also increased in the last one week due to a “cascading impact” on the vegetable oil basket.
“The recent increase in mustard oil prices is mainly because of changes in the global market for edible oils. When the price of other oils, like soyabean or palm oil, rise due to higher demand or supply problems, people switch to mustard oil, pushing its price up too,” Umesh Verma, spokesperson of P-mark, a leading brand of mustard oil, told FE.
Verma said as the festive season approaches and more people buy mustard oil for its health benefits, the higher demand, especially when supply is low, leads to higher prices.
Duties on crude palm, soyabean and sunflower oils have been increased to 27.5% from the current level of 5.5%. While the levy on refined edible oil has been raised to 35.75% from 13.75%, implying a net increase of 22% on both crude and refined edible oil.
Source Link : https://www.financialexpress.com/policy/economy-edible-oil-prices-up-5-10-per-cent-may-rise-further-3621994/
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