Rising Onion Prices Strain India’s Inflation Amid Vegetable Price Dip

Despite a 4.1% dip in overall vegetable prices in November, onion prices remain high, exacerbating India’s inflation. ICICI Bank reports significant annual increases in vegetable costs, led by tomatoes, potatoes, and onions. Weather disruptions continued to impact supply, fueling persistent inflationary pressures.

November witnesses a surprising trend in India's vegetable market; while most vegetable prices have dipped by 4.1% month-on-month, onion prices persistently remain high, according to a report by ICICI Bank. This anomaly is adding pressure to India's inflationary dynamics.

The report highlights that the overall vegetable prices, although showing some relief in November, have risen 42% year-on-year, marking a 57-month peak as of October. Essential vegetable staples like tomatoes, potatoes, and onions have experienced drastic price hikes of 161%, 65%, and 52% year-on-year, respectively.

Heavy rains in August and September disrupted supply chains, resulting in a 28% reduction in mandi arrivals over the past two months. This led to a steep month-on-month increase in tomato prices by 49% in October. Despite some price deceleration in November, onions are showing no signs of easing, continually impacting retail inflation, which accelerated to 6.21% in October.

(With inputs from agencies.)