Onion prices will remain high in November says a research report of ICICI Bank

The prices of onion continue to remain high in November while other vegetable prices are seeing a dip of 4.1 per cent MoM in Nov so far, highlighted a report by ICICI Bank.

The report noted that the overall vegetable prices have seen some relief in November, but onion prices continue to remain elevated, contributing to India's inflationary pressures.

It said "prices are seeing some deceleration in November. Although onion prices continue to remain elevated in November, veggie prices are seeing a dip of 4.1 per cent MoM in Nov so far".

But despite the fall in vegetable prices in November, on an annual basis prices are still running high, recording a 57-month peak with a year-on-year increase of 42 per cent in October.

The report noted that this surge in vegetable prices is led by significant price hikes in essential items prices like tomatoes, potatoes, and onions. Tomato prices have skyrocketed by 161 pc year-on-year, while potatoes and onions have seen price hikes of 65 pc and 52 pc, respectively.

The report attributed this price surge to heavy rains in August and September, which disrupted supply chains, leading to a 28 per cent drop in mandi arrivals over the past two months and pushing up tomato prices by 49 per cent month-on-month in October. While November has brought some deceleration, onion prices have remained consistently high, showing no sign of easing.

The ongoing high prices of essential vegetables have also fuelled India's retail inflation, which accelerated to a 14-month high of 6.21 per cent year-on-year in October.

Additionally, core inflation, which excludes food and energy prices, rose to 3.7 per cent in October from 3.5 per cent in September.

Within the food sector, vegetable prices continued to rise sequentially, recording an 8.2 per cent month-on-month increase in October, following a 3.5 per cent rise in September. This trend underscores the significant impact of vegetable prices on overall food inflation.

It said "Within food, vegetables continue to see a sequential uptick in prices at 8.2 per cent MoM after a 3.5 per cent MoM increase in September".

This price trend, driven largely by weather disruptions, remains a key factor affecting India's economic outlook in the near term.