Amidst festival season, 1 in 2 households surveyed report experiencing the pinch due to increase in edible oil prices

Oct 25, 2024, New Delhi: The steep hike in the prices of many edible oils just ahead of Diwali when consumption increases has upset the family budgets across the country, especially in households which like to celebrate these festive events by hosting family and friends. Right after the festive season, India goes into the wedding season, which are also going to see a spike in budgets due to higher edible oil prices. Combined with the rise in prices of most vegetables and staples, it is sure to make a dent in the budget of most households.

The retail prices of most cooking oils increased after India raised the import duty by about 20% on September 14. Duties on crude palm, soyabean and sunflower oils was increased to 27.5% from the level of 5.5% just ahead of the oilseeds marketing season that begins in October. The levy on refined edible oil has been raised to 35.75% from 13.75%, implying a net increase of 22% on both crude and refined edible oil. India imports about 58% of 24-25 million tonne (MT) edible oil consumed in the country.

The result is all India average prices of packaged mustard oil has increased by 17.5 %, soyabean oil by 14.87%, sunflower by 18% and palm oil by 24% during last two months, according to the Ministry of Consumer Affairs data.

The Department of Food Processing in a letter to solvent extractors, vegetable and soyabean oil producers’ associations had urged the edible oil industry not to increase the MRP till they exhaust the old stock that was imported at zero or less duty. However, with the industry not heeding the government directive, the Department of Food has expressed its displeasure at how the industry had increased prices “drastically” as “there was no legitimate cause to increase domestic prices till the (old) stock (was) exhausted”.

Responding to the department’s displeasure and demand for “clarification”, the Solvent Extractors Association of India, an apex body of edible oil makers, had urged its members “to be mindful of consumer interest and not allow prices to move up” considering the ensuing festive season. But as expected, there is no downward movement in the price of major edible oil brands, which have increased prices by Rs 8-22 per litre.

With over a hundred posts and comments received on the subject just within the last 3 week, LocalCircles has conducted a survey to find out what has been the impact of rising edible prices on household consumers and whether it has led to any change how they shop for cooking oil. The survey received over 22,000 responses from household consumers located in 303 districts of India. 62% were men while 38% respondents were women. 40% respondents were from tier 1, 31% from tier 2 and 29% respondents were from tier 3, 4 & rural districts.

58% households are purchasing edible oil at a discount to MRP; Retail and Local Market remain top channels for purchase

Not all consumers buy branded oil or from big retail chains or online platforms, to avail of discounts offered. The survey first asked consumers, “What is the price and source you are generally using to purchase your edible oil?” Out of 10,596 who responded to the question 19% indicated “at MRP and via retail store”; 9% indicated “at MRP and via online/ eCommerce apps”; 9% indicated "at discount to MRP and via local market”; 23% indicated "at discount to MRP and via organised retail store”; 26% indicated "at discount on MRP via online/ eCommerce apps”; 9% indicated "at MRP and via local market”; 3% stated that they are “buying unpackaged or loose edible oil from the market”; and 2% of respondents did not give a clear answer. To sum up, 58% households surveyed are purchasing edible oil at a discount to MRP; Retail and Local Market remain top channels for purchase.

Only 37% household consumers surveyed are purchasing edible oil at MRP while majority get some discount

A look at prices being paid by households to purchase edible oil shows that while 58% of consumers are buying edible oil at a “discount to MRP”; 37% are “purchasing at MRP” and 3% of respondents are “purchasing “unpackaged or loose edible oil”. In essence, only 37% household consumers surveyed are purchasing edible oil at MRP while majority get some discount from physical and online stores.

47% Indian households are coping with high edible oil prices by lowering consumption, cutting discretionary spending and downgrading to a cheaper brand or oil type

As the rise in retail prices of edible oil impacts most households juggling income and expenditure, the survey next asked, “What all are you doing to cope with high edible prices?” Some among 11,844 who responded to the question indicated more than one option. The biggest group among respondents of 48% stated “have not done anything and are just paying more for edible oil, dipping into our savings”; 36% stated “using lesser quantity of oil than what we used to earlier”; 16% stated “have cut discretionary spending so we can pay the higher price for edible oil”; 13% stated “have downgraded to a cheaper brand”; 5% stated “have downgraded to a cheaper oil type” and 5% of respondents did not give a clear response. To sum up, 47% Indian households are coping with high edible oil prices by lowering consumption, cutting discretionary spending and downgrading to a cheaper brand or oil type.

In summary, 58% of households surveyed are purchasing edible oil at a discount to MRP and 37% are purchasing edible oil at MRP. The survey shows that retail and local markets remain top channels for purchase of edible oil. With too many expenditures, those with limited resources are trying limited options. 47% Indian households are coping with high edible oil prices by lowering consumption, cutting discretionary spending and downgrading to a cheaper brand or oil type. While the government move to increase tariff on imported crude and refined edible oil to protect oil seed farmers and edible oil producers is welcome, steps should be taken to ensure that consumers, which includes farmers, are not adversely affected. To be able to buy edible oil, consumers shouldn’t be pushed to buy poor quality or loose oil, which can affect their health. It is unfortunate that oil dealers hiked the prices ahead of the festive season thereby dampening their plans for celebrations, however small or big.

Survey Demographics

The survey received over 22,000 responses from household consumers located in 303 districts of India. 62% were men while 38% respondents were women. 40% respondents were from tier 1, 31% from tier 2 and 29% respondents were from tier 3, 4 & rural districts. The survey was conducted via LocalCircles platform, and all participants were validated citizens who had to be registered with LocalCircles to participate in this survey.