Inflation is set to get a further boost with speculators stocking up prices of onion and potatoes, the two staples that the ordinary Indian home can never do without. The price spike comes at a time when the new NDA government at the centre is battling food price inflation.
Prices of the two vegetables have shot up by up to 55 per cent in the main markets in the country over the past fortnight. Reports quoting market insiders say the spike in the prices of potatoes and onion has been due to speculative trade in these commodities.
Spot prices of onion at Maharashtra's Lasalgaon market, India's largest onion market, stood at Rs1,250 a quintal on Monday, up 22 per cent from Rs1,025 on 2 June. In the APMC market in Ahmedabad, onion price has shot up by 55 per cent to levels around Rs1,400 a quintal since 2 June, say reports.
Potato prices have shot up by 16 and 18 per cent, respectively, in Delhi and Mumbai to Rs1,720 per quintal and Rs1,850 a quintal, respectively, during the past fortnight.
Market insiders say speculative forces are behind the steady price rise. They say the price rise was stocked by concerns of possible crop damage and a flash strike by workers at Nashik, which hampered onion supplies.
India produced 19.2 million tonnes of onion in 2013-14, up 14 per cent from last year's 16.8 million tones, leaving enough stock. Estimates show that about 3-3.5 million tonnes of onion is stored either with the farmers or traders anticipating higher prices like last year.
Data provided by the National Horticultural Research and Development Foundation (NHRDF) showed an increase in onion arrivals in June this year against arrivals in June 2013.
At Lasalgaon, arrivals were 15,500 quintals on Monday, against 12,900 quintals a year ago. In the Ahmedabad market, the arrivals stood at 9,747 quintals from 5,520 quintals reported for same day last year.
While there were concerns over monsoon, they say, once onion sowing takes place in kharif, prices will stabilise. Potato prices, however, are expected to move up for a few weeks more as potato futures are firm.
Potato arrivals too were higher against last year but prices continued to rise steadily. In Mumbai, potato arrivals increased to 15,280 quintals on Monday (16 June) against 12,400 quintals on 17 June 17 last year. Prices have since jumped by over 60 per cent on year-on-year basis from Rs1,150 a quintal to Rs1,850 a quintal.