Edible oil prices may stay firm until November, adding to inflation risks

New Delhi: Rising edible oil prices are emerging as a fresh risk to India’s inflation outlook, with prices up 12-15% over the past year on higher global prices, freight costs and rupee depreciation. With little prospect of relief before November, when the new crop is expected to arrive in larger quantities, India’s heavy dependence on imports leaves domestic prices exposed to further external cost pressures.

Prices are expected to stay elevated before the new crop offers relief, industry executives said, citing stronger demand during the upcoming festival and wedding seasons.

“Higher oilseed sowing will not have any immediate impact on edible oil prices because India imports nearly 60% of its consumption. Geopolitical developments will also remain a key factor, particularly given the dependence on imports. Any disruption in global trade flows and changes in crude oil prices could affect landed costs. Therefore, the near-term price outlook will depend more on external factors than on the increase in domestic oilseed acreage," said B.V. Mehta, executive director, The Solvent Extractors Association of India (SEA).

The price pressure comes as inflationary pressures are beginning to build. Consumer Price Index (CPI)-based inflation rose to 4.45% in July from 4.38% in June, and higher edible oil prices are among the factors economists expect could push inflation higher in the coming months.

Queries emailed to ministry of consumer affairs, food and public distribution remained unanswered till press time.

Import dependence

India imports nearly 60% of its edible oil consumption, with monthly imports typically ranging between 948,000 tonnes and 1.6 million tonnes. Imports jumped to 1.48 million tonnes in July from 1.1 million tonnes in June, an increase of about 35% month-on-month.

The increase was driven primarily by palm and soybean oil. Palm oil imports rose 48% to 719,000 tonnes in July from 486,000 tonnes in June, while soybean oil imports increased 31% to 498,000 tonnes from 380,000 tonnes.

July imports, however, were 8.3% lower than the 1.61 million tonnes imported in the same month last year. Cumulative edible oil imports during the first nine months of the 2025-26 oil year, from November 2025 to July 2026, stood at 11.9 million tonnes, up 5% from 11.3 million tonnes in the corresponding period a year earlier, according to the SEA.

Global edible oil prices are also adding to the pressure on domestic prices.

Global edible oil prices have remained firm over the past month, led by palm oil amid stronger biodiesel demand and tighter supply expectations. The Food and Agriculture Organization (FAO) vegetable oil price index rose 2% month-on-month in July.

Major producer countries are diverting palm and soybean oil towards biofuel and biodiesel blending mandates, while seasonal output in Southeast Asia remains tight. Higher logistics, energy, insurance and freight costs amid geopolitical tensions have also raised landed costs for Indian importers.

New crop

The increase in domestic oilseed acreage offers some prospect of improved availability later in the season, but is unlikely to ease prices immediately. Agriculture ministry data showed oilseeds sowing at 18 million hectares as on 7 August, up from 17.5 million hectares a year earlier, supported by higher coverage under groundnut, soybean, sunflower and sesamum.

“The crop is currently in the field and as of now the crop condition is very good. Since no major availability is expected until harvest of new crop is completed, edible oil prices are likely to remain firm. However, the area under oilseeds crop in the country has increased during ongoing kharif season by around 5% due to predicted El nino situation in the country compensating reduction in sowing of other crops. This could, in turn, boost oilseed production,” said Anand Vishwakarma, project coordinator, All India Coordinated Research Project on sesame and niger, Jabalpur.

“The benefits of increased domestic acreage will be felt only when the new crop arrives in the market which is in November. Until then, we foresee the domestic prices will remain firm largely influenced by global edible oil prices and import costs," said A.R. Sharma, chairman of Ricela Group, primarily known for its rice bran oil production and processing.

India's edible oil demand is around 26 million tonnes annually, while domestic production can supply only up to 40% of this requirement.

According to data from the Ministry of Consumer Affairs, the all-India average retail price of sunflower oil rose to ₹189.40 per kg as of 12 August from ₹161.02 a year earlier. Soybean oil rose to ₹164.5 per kg from ₹147.2 over the same period, while palm oil increased to ₹147.4 per kg from ₹130.5.