Onion deflation at 6.5-yr high in Sep amid subdued exports

Onion prices are once again seeing prolonged periods of deflation. Consumer price index (CPI) based deflation in onions was recorded at 49.5 per cent in September, which was a six-and-a-half-year high.

- SANJEEB MUKHERJEE & HIMANSHI BHARADWAJ

This is the steepest deflation rate recorded in onions since February 2019 (see chart).

So far, in this current financial year (2025-26), only April saw a moderate inflation of 2.85 per cent in onions and since then it has seen a deflation in every succeeding month.

The unusual trend

The latest price slump has come during a period when traditionally onion prices tend to soar. While this unusual fall is benefiting consumers, growers are at the receiving end.

Onion prices tend to increase during the lean months of September to December, as the stored rabi harvest is almost exhausted while the early kharif harvest is yet to arrive in the markets. The price spike gets exacerbated if the early kharif harvest is impacted due to surplus rains.

However, this year, none of this has happened.

While the southwest monsoon has been surplus in many parts, and it has impacted the standing crop in several parts of Maharashtra, it has not pushed up their prices.

A main reason for this, according to some market players, is that traders are sitting on huge stockpiles of onions produced during the previous rabi harvest and warehouses are filled with onions from the previous season.

Trade estimates that almost 40 per cent of stored rabi onions are still lying in the warehouses which is keeping a tab on prices and pulling it downwards.