Increase in the price of edible oils due to devaluation of rupee
12-Feb-2025 03:29 PM
The recent surge in edible oil prices in India is directly linked to the devaluation of the Indian rupee against the US dollar. As the rupee weakens, the cost of importing edible oils, which India relies on for around 60% of its supply, becomes more expensive. This has led to a 5% rise in edible oil prices in just the last two weeks.
The impact is widespread, affecting oils like soybean, sunflower, palm, and others. Prices have seen significant increases, for example:
- Palm oil has risen from ₹140 to ₹145 per kg
- Soybean oil from ₹128 to ₹135 per kg
- Sunflower oil from ₹153 to ₹158 per kg
- Groundnut oil from ₹183 to ₹185 per kg
- Cottonseed oil from ₹125 to ₹131 per kg
- Mustard oil from ₹163 to ₹166 per kg
- Rice bran oil from ₹125 to ₹132 per kg
This hike is not just due to the exchange rate but also the changing dynamics in major exporting countries. Palm oil prices have increased due to increased demand for biodiesel production in Indonesia, coupled with adverse weather conditions like drought in Argentina, which threatens soybean crops. Furthermore, the reduced sunflower production in Ukraine has added to the pressure on global oil prices.
While India's dependence on imports and the weakening rupee are key factors, the overall global oil market is also undergoing shifts due to weather-related issues and changes in production trends, such as the expected high soybean harvest in Brazil. The only potential way to mitigate these rising prices would be a strengthening of the Indian rupee.
This has led to increased costs not only in edible oils but also in other imported goods like dry fruits and nuts, showing how the interconnectedness of global trade and currency fluctuations affects domestic markets.