Vegetable prices skyrocket in Delhi due to high fuel cost, damaged crops

Edible oil prices have also continued to rise due to high global prices, prompting the central government to take measures such as requiring traders to disclose stocks. The government on October 13 wrote to the states asking them to ensure that the prices of edible oils are brought down after the reduction in import duty by March 22.

The government has created a record stock of 200,000 tonnes of onions to tide over a possible price jump during the current weak season.

The prices of some food items, where seasonality plays a big role, are volatile. Onion price often stoke food inflation and affect the monthly budget of consumers, poor or rich, as it is a basic ingredient of most Indian cuisine.

According to past data, onion prices tend to rise during September as it marks the beginning of the nearly three-month bearish season, when stocks of the previous crops are depleted. The fresh harvest usually comes in winter.

Tomato prices rise ₹60-65 per kilogram (kg), while onion was being sold at ₹50-55, up in Delhi, Patna, Kolkata and Mumbai ₹20-25, data from Agricultural Produce Market Committees showed.

Rains in Karnataka and Maharashtra have damaged supply lines and crops in key growing areas, said Arun Solanki of Nashik-based Solanki India Ltd, which supplies vegetables grown in Maharashtra.

“There’s a ₹Slow supply has led to an increase of 10-15% in the prices. Gupta, SP of Ghazipur Wholesale Vegetable and Fruit Market in the National Capital Region, said back-end suppliers say it is because of heavy rains this summer.

Maharashtra, Karnataka and Andhra Pradesh are the major onion producing states, accounting for more than 75% of the total summer onion production. In these states, there has been a delay or loss of onion crop in summer.

Price growth is a major determinant of monetary policy. Moderate inflation helps the Reserve Bank of India keep interest rates low to boost economic activity, which has been hit by the Covid-19 pandemic.

“Onions in most Indian households are likely to make consumers cry again due to erratic monsoons, which may delay the harvest,” rating firm Crisil Ltd said in a recent research note.

Onion trading classic is prone to price volatility. This is mainly due to factors such as extreme weather and losses from insufficient or improper storage, which can cause supplies to be less than surplus in a matter of weeks.

Short periods of heavy rainfall followed by prolonged dry spells are clear indications of the changing season’s impact on the monsoon.

The government is “monitoring the prices of all essential commodities as usual”, an official said on condition of anonymity. If prices rise, the government will take steps to keep prices stable by releasing onions “as and when needed” from its godowns, he said.