Inflation alert! Cooking oil price may rise again in India, know why

The rising inflation has become a major cause of concern as the middle and lower class. The Covid-19 pandemic laid a significant impact to the global economy and now various other issues are cropping up to burn a hole in the pockets of the poor.

Let us tell you the biggest producer of palm oil – Indonesia has decided to stop its export. This may lead to a hike in the cooking oil prices.

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The Indonesian government has been forced to stop exports due to rising inflation and the dire need to restrict exports to ensure there are adequate stocks for domestic consumption.

Speaking about the changing industry trends, Senior vice president, Sales and Marketing at Gemini Edibles and Fats India - P Chandrashekhara Reddy said, “Indonesia made a statement stopping exports from April 28. Per se, it is to control inflation in their homeland. Indonesia has 46 million metric tonne (mmt) production and they need about 15 mmt for domestic consumption. In addition, they need about seven mmt for their biodiesel production. Going by these figures, they are in need of exports in some form. We will have to wait and watch for a few more days for clarity.”

As mentioned by Reddy, there isn’t much clarity about what will happen about the existing contracts with Indonesia, but these changes will impact the domestic oil prices in India.

At this point, palm oil is being sold at about Rs 175 per litre at retail outlets. Blended oil and sunflower oil are priced at Rs 190 and Rs 230 respectively.

Notably, the ongoing war between Russia and Ukraine has already hiked the price of cooking oil as the two fighting countries are major producers of sunflower oil.

Citing the concerns about easy availability of cooking oil in Indonesia’s domestic market, President Joko Widodo earlier said in a video broadcast, “I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable.”

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According to industry body Solvent Extractors Association of India (SEA), this announcement by Indonesia will severely affect the consumers in India and other countries.

In comparison to February, the price of cooking oil has increased by Rs 20 to Rs 25 per litre. This is because the Russia-Ukraine war has aggravated logistics costs.

Based on sources, Indonesia will stop exporting palm oil from April 28. After this, palm oil and its derivatives will be available at a higher value.