As per many Guru’s on TV inflation is likely to surge to 17% by September 2008. The government is likely to hike prices between 10 and 20% again, as early as September to limit fiscal risks. The rise in the price for the Indian crude oil basket could be the trigger for another round of increase in fuel prices to $145 to 150 per barrel from the current $132 per barrel. Since vegetable oil prices are related to crude oil, the direction which crude takes will be crucial for edible oils. At present, a kilo of fortune soyabean oil costs consumers around Rs.70 , while the same quantity of the brand’s sunflower oil costs around Rs.77 to 78. It is a known fact that India imports around 5mm tonne of vegetable oils, with the total consumption of edible oils at around 13 million tonne.
Even through there is high inflation levels in the air, yet the statistics show that consumers have not down traded or consumed less of edible oils during the first half of the current calendar year. The edible oil industry had reported a volume growth of 13% in the year 2007 and it continues to grow in double digits. The volume growth till June 2008, stands at 12% with the value growth even higher on account of price increases. One can now say that inflation is not hitting the average middle class families as it used to be in the 70’s and 80’s. Although there is a slight margin pressure, yet the situation is not alarming.