Inflation Spreads; Onion Scarcity Raises Concerns of Household Budgets


Inflation: According to wholesalers and analysts, supplies of the culinary staple are becoming increasingly scarce in several of the world’s largest marketplaces because of a yearly lean period when stock prices fall. If that occurs, it will damage household finances, which are already tightened by the sharp increase in tomato prices, which retail for more than ₹200 per kg in major areas. In the case of onions, the government has close to 250,000 tonnes of reserves, which it releases to the markets when supplies bottom out, unlike tomatoes or the majority of greens, whose elevated costs have hurt people.

Unpredictable Nature of Onions in Indian Cuisine

However, price volatility is a feature of the primary ingredient found in the majority of Indian recipes. Trends also demonstrate that once onion inflation as a phenomenon takes hold, it takes a long time to fade. Heavy rains over the previous month have “decreased supplies” and caused “a lot of damage to stored onions,” according to farmers, according to Narendra Wadhwane, secretary of the Lasalgoan agricultural market committee, Asia’s largest onion market in Maharashtra. “The government is monitoring onion demand and supply as we do in case of 22 essential items across 536 points across the country. We have enough stocks to intervene in the market and there is no concern,” a government official said.

Onion Business Voices Unease Over This Year’s Winter Harvest

Those in the onion business claim that this year’s winter crop, which meets 70% of the annual demand, wasn’t as robust as last year’s crop. India frequently imports onions in times of economic hardship, however in 2021–22 and 2022–23, the nation didn’t do so. Prices for onions have been fair over the previous four months. August and September typically mark the beginning of a dry season. The following onion harvests will occur in October. According to official data, modal retail prices have stayed constant at ₹25 for kilogramme. A form of average is the modal price. But analysts say a pricey spell is on the cards. “The acreage under rabi (winter-sown) 2023 (December 2022-January 2023) is estimated to have been lower by 3.5%, led by 25-27% lower realisation by farmers in the previous season,” said Pushan Sharma, economist with Crisil Market Intelligence and Analytics.

High Temperatures Hasten Onion Harvests

High temperatures in February caused onions to mature earlier than usual, speeding up harvests. Sharma noted that this has decreased their shelf life and increased the current stress. “Owing to the reduced shelf life and panic selling in February-March, rabi stocks are expected to decline significantly by end-August, which is likely to expose markets to tight supplies and high prices,” Sharma said. Compared to many other commodities, consumers are highly sensitive to an increase in onion costs. While retail prices frequently increase, typically at this time of year, price drops are also not unheard of.

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