With the recent announcement of increased import levies on crude and refined oil, consumers are starting to feel the squeeze of inflation in kitchen basics like edible oil.
The modal or benchmark retail prices of mustard, sunflower, and palm oil all of which are frequently used in Indian kitchens—have increased to Rs 148/litre, Rs 129/litre, and Rs 110/litre on Tuesday from Rs 140, Rs 120, and Rs 100 on September 13, respectively, according to the Department of Consumer Affairs’ Price Monitoring Cell. Since the announcement of the duty hike twelve days ago, there has been an increase of five to ten percent.
Experts estimate that of India’s 24–25 million tonne (MT) edible oil usage, 58% comes from imports.
Since February 2023, the retail inflation rate for the oil and fat category has been negative. However, due to the increase in levy, edible oil producers will now need to source from the domestic market rather than import from outside. This has caused the mandi price of soy and mustard to rise over the minimum support price (MSP) in the last week.
The Food Ministry has urged edible oil manufacturers to keep cooking oil prices at their current levels until lower-duty imported oil becomes available, as both the government and businesses are concerned that the price increases may harm consumption.
Retail prices of mustard oil have risen in the past week due to a “cascading impact” on the vegetable oil basket, even as import levies have been raised for palm, soybean, and sunflower oils—all of which the nation imports in significant quantities.
The current 5.5% duty on crude palm, soybean, and sunflower oils has been raised to 27.5%. However, the tax on refined edible oil has increased from 13.75% to 35.75%, meaning that the combined amount of crude and refined edible oil has increased by 22%.
