Retail food inflation reached 5.95% in August, raising concerns as prices for onions, sugar, and oils climbed. Average onion prices hit Rs 53.52/kg on Friday, up 100% from last year. The government started selling onions at Rs 35/kg to help. Officials said prices should soften once fresh crops arrive soon.
Rise in prices of these commodities is attributed to declining production and higher global prices. The elevated prices of these commodities are likely to push food inflation further in the coming months.
Retail food inflation was 5.95% in August compared to the previous year, primarily because ginger, garlic, onion, sugar, chicken, and edible oils became costlier. Consumer price index data for September is due on Monday.
Average retail onion prices rose to Rs 53.52/kg on Friday, up 100% from a year earlier. Retail prices have risen by more than 50% over the past month, while prices in Delhi-NCR have crossed Rs 60/kg.
However, the commencement of fresh kharif crops in Karnataka, Andhra Pradesh and Rajasthan, higher acreage and robust crop conditions has led to around a 13% decline in average mandi prices in Maharashtra, currently to Rs 400/quintal from Rs 3475/quintal last month, according to an official statement. The consumer affairs department expects retail prices to soften over the next few weeks.
To curb the price rise, the government has started to offload onions at the subsidized rate of Rs 35/kg from its buffer, while sources said that prices are likely to rise until the end of October, until the arrival of the kharif harvest.
Retail prices of sugar and mustard oils increased to Rs 55.34/kg and Rs 203.39/kg on Friday, a 19% and 8% increase over the previous year respectively. Sugar prices saw a sharp spike in August because of a decline in production during the 2025-26 season (October–September) and the government announced raw sugar imports of 1 million tonne (MT).
Industry sources said with the crushing of sugarcane for the new season (2026-27) expected to commence later this month, supplies of the sweetener are expected to improve and thus bring down the prices.
Retail prices of rice increased to Rs 46.92/kg on Friday, a 9% increase over the previous year.
An official said the government currently holds over 38 million tonnes (MT) of rice stock against a buffer requirement of 10.25 MT for October 1; this stock would be offloaded under the open market sale scheme to curb the price rise.
Retail prices of wheat and chana (gram) dal, as of Friday witnessed only a marginal year-on-year increase due to ample supplies, robust buffers and output. Wheat prices have increased only by 1% year-on-year to R 32.05/kg. FCI currently holds 38.56 MT of wheat stock against a buffer of 20.5 MT for October 1.
Traders said the government currently holds over 20 MT of surplus wheat after meeting the requirements of the public distribution system and buffer stocks.
Potato prices have declined over 10% to Rs 22.72/kg compared to the previous year while tomato prices have increased to Rs 42.7/kg, a 10% year-on-year decline. Officials state that potato prices have declined due to robust production and stocks in storage.