Onion Prices Spike Ahead Of Diwali Due To Heavy Rains And Supply Challenges

File Photo

New Delhi: Onion prices are set to stay high throughout the Diwali season due to crop damage caused by heavy rains in major growing regions. Onions are currently being sold for Rs 60-80 per kg in retail markets. The bad weather in states like Maharashtra, Karnataka, Telangana and Andhra Pradesh has disrupted supply which led to a sharp rise in prices. As a result, consumers can expect these elevated rates to persist during the festive season.

Prices of onions, tomatoes and cooking oils have contributed to September’s inflation hitting a nine-month high with food inflation expected to remain elevated in October, according to a report by the Economic Times.

Onion prices have remained steady at Rs 45-50 per kg for more than a month in the Lasalgaon whole market of Nashik. The government expected prices to drop as the kharif crop harvest began in several southern states. However, heavy rains have caused issues, damaging crop quality and leaving fields waterlogged. This has delayed harvests by 10 to 15 days, putting additional pressure on supply.

Experts predict that onion prices will remain high for at least two to three weeks. Vikash Singh, an onion exporter from Maharashtra, told The Economic Times, "The harvest of the kharif onions would be delayed in the areas that have been getting rainfall, which could keep the onion prices firm for at least two to three weeks."

Govt Steps In

To tackle the rising onion prices, the Centre has begun selling onions from its buffer stock at retail. They have also introduced a ‘kanda train’ service for the transportation of onions from Nashik to Delhi. This aims to reduce the transportation costs and improve availability in northern India.

The heavy rainfall has affected the quality of onions ready for harvest in southern states. Tonkini Pramod Kumar, a trader from Hyderabad and owner of Sri Swami Ayyappa Traders, stated that the quality of onions has declined considerably due to the severe rainfall in Kurnool and other parts of Telangana and Andhra Pradesh.

Rising prices for onions, tomatoes, and cooking oils have pushed India's retail inflation up from a five-year low of 3.65 percent in August to a nine-month high of 5.49 percent in September. Food inflation, a crucial part of the Consumer Price Index, jumped from 5.66 percent in August to 9.24 percent in September.

Moreover, edible oil prices have risen for the first time in September after two months of stability and this trend is expected to continue. This increase is mainly due to higher import duties imposed by the Indian government and a global surge in palm oil prices, which is a significant part of India's cooking oil imports.