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Cooking oil prices may increase as rupee fall

Retail prices will increase in a week's time; this will be the second increase this month.

, ET Bureau|
Aug 22, 2019, 01.30 PM IST
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Edible oil is the biggest ingredient in Indian cooking and is used for preparing food, frying and making sweets.
New Delhi: Consumers will have to pay 3 per cent more for palm oil, 4 per cent more for soyabean oil and 6 per cent more for sunflower oil with the rupee getting devalued by 4 per cent in the past one month, said edible oil companies. With India importing nearly 70 per cent of its annual consumption of edible oil, which is at 23.5 million tonnes, the devaluation of the rupee has made imports costlier, said the industry.

Retail prices will increase in a week's time, they said. This will be the second increase this month.

In the first week of August, edible oil companies in wholesale increased soya bean oil by 3 per cent to Rs 85 a litre, palm oil by 2 per cent to Rs 62 a litre and sunflower by 5 per cent to Rs 90 a litre.

“In a week’s time consumers will have to pay more for edible oil prices. Soyabean oil will increase by Rs 3.5 per litre, plam oil by Rs 2 a litre and sunflower by Rs 5 a litre,” said Angshu Mallick, deputy chief executive at Adani Wilmar.

Unlike the previous time when prices increased owing to the spurt in global sunflower and soyabean prices, this increase was due to rupee devaluation, said Mallick. “The rupee has reached 71.70 and we don’t expect commodity prices to come down till mid- September,” he said.

Edible oil is the biggest ingredient in Indian cooking and is used for preparing food, frying and making sweets.

The rise in prices will not affect demand, said Sudhakar Desai CEO of Emami Agrotech. “Since international markets of palm and soya prices are holding on, buyers will have to fill up the pipeline to meet festival demand ahead,” he said.

Desai said that since the beginning of August, edible oil prices have increased. “Due to rupee weakening, prices of all edible oil including mustard oil have gone up by about Rs 2 to 3 a litre,” he said.

Nirav Desai of Indore based GGN Research said that with India having a huge dependency on imports, the future prices for edible will be supportive as he expected the rupee to remain devalued for a while. “The rupee can reach 72.25 level by September,” he said.

Nirav said that in the edible oil trade, the price increase in the bulk market was immediate, while for consumer packs it took 3-7 days. He added that in 2018-19, edible oil prices were at the lowest in the last eight years and now they saw a pick up owing to firm commodity prices and rupee devaluation.

In the Indore wholesale market, refined soya oil increased 4.5 per cent to Rs 755 per 10 kg from a month ago, while refined palm oil was at Rs 610 per 10 kg, up by 7 per cent on Tuesday in the same period. The rupee depreciated by 4 per cent to 71.70 levels in the past one month, said Nirav.

Prices of soyabean in the domestic wholesale market have increased by 4 per cent to Rs 3,750 a quintal, while mustard prices are ruling at Rs 4,170 a quintal, which is 2 per cent higher than a month ago, added Nirav.

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