The Union government earlier this week asked representatives of the Solvent Extraction Association of India (SEAI) and Indian Vegetable Oil Producers’ Association (IVPA), which cover most edible oil producers and brands, to cut retail rates of the commodity immediately and pass on the benefits of a steady fall in global rates to all types of domestic consumers, especially households.
As per an official data, there has been a decline in retail prices in the past one year and the drop has not been commensurate with the fall in global prices. At the same time, edible oil imports have witnessed a sharp spike owing to the softening prices.
India imports up to around 60% of its edible oil demand and four key oils—palm, soya, mustard and sunflower—account for nearly 90% of the total consumption in the country.
The edible oil prices in the international market have been shrinking for the past six months, but the downtrend trend has not been reflected in domestic prices.
Even bumper crops of groundnut, soyabean and mustard did not result in price cuts.
According to the representatives of oil makers, the global prices of different edible oils had declined by $200-250 per tonne over the last two months. However, they say the impact of lower prices takes time to be transmitted to retail markets. The cooking oil industry has assured the government that consumer prices will surely come down shortly. In this manner, the government’s intervention is set to bring some relief. As per reports, the companies have decided to reduce the prices of cooking oil by up to 6 per cent. A leading firm has already announced a cut of Rs 15-20 per litre across variants.
While consumer inflation slid to the lowest level since December 2021 in March 2023, falling back into the central bank’s target range for the first time in three months at 5.66%, the statistics have too little bearing to the common consumer who continues to battle on various fronts.
Feeling the pinch, lower and middle-income households have been downgrading the oil they use for cooking. Many have cut consumption.
A reduction in edible oil prices is set to bring down retail inflation proportionately. It will surely give some relief to the common man. There is need to work on other fronts to see that other items of daily use also see reduction in the prices.