Edible Oil Inflation Rises to 17% in March Despite Overall Price Moderation
15 April 2025, New Delhi: Even as India witnessed a moderation in headline and food price inflation in March 2025, the edible oil segment experienced a sharp surge, with inflation in this category rising to 17% year-on-year. This spike stands out amid an otherwise easing inflationary trend and has drawn attention to recent policy changes affecting the sector.
Sudhakar Desai, President of the Indian Vegetable Oil Producers’ Association (IVPA), attributed the rise to a strategic decision made by the Government of India in September 2024 to hike import duties on crude vegetable oils from 5.5% to 27.5%.
“The weightage of vegetable oils and fats in the Consumer Price Index (CPI) is around 4%, covering both rural and urban consumption. The 17% year-on-year price increase in March is primarily due to the government’s move to encourage domestic oilseed cultivation and to strengthen support for Minimum Support Prices (MSP) to benefit oilseed farmers across the country,” said Desai.
Currently, domestic prices of mustard and soybean—two major oilseed crops—are trading slightly below their respective MSPs. The upcoming mustard harvest is expected to influence prices further in the short term.
India imports nearly 60% of its edible oil requirements, making the domestic market highly sensitive to global price movements. According to Desai, other key short-term market drivers include global tariff trends, bio-diesel policies, monsoon projections, and zero-duty imports from SAFTA (South Asian Free Trade Area) countries.
The recent increase in import duties appears to be a calculated effort to reduce dependence on imports while offering better returns to Indian oilseed farmers. However, this comes with the short-term consequence of elevated retail prices for consumers.
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