Cut in edible oil import duty and above normal monsoon likely to further ease food inflation: Union Bank of India

ANI June 13, 2025 281 views

The government’s recent cut in edible oil import duty and an early monsoon arrival are expected to ease food inflation. Union Bank of India’s report highlights these factors as key drivers for lower prices in the coming months. However, extreme weather events like heatwaves could still disrupt crop yields and inflation trends. Despite risks, the overall outlook remains cautiously optimistic with inflation at a five-year low.

"Above normal rainfall for the season coupled with slashed import duty on edible oils bode well for food inflation in coming months." – Union Bank of India
New Delhi, June 13: The recent above normal rainfall and a significant cut in import duties on edible oils are expected to support easing food inflation in the coming months, according to a report by Union Bank of India.

Key Points

1

Import duty on edible oils slashed from 20% to 10%

2

Southwest monsoon arrives early with 106% above-normal rainfall

3

CPI inflation drops to 2.82%, lowest since 2019

4

Heatwaves in northwest India pose crop risks

The bank noted that these developments could help reduce the prices of essential food items, although some risks remain as any weather disruption (floods / drought) which may result in an adverse inflation scenario.

It said "Above normal rainfall for the season coupled with slashed import duty on edible oils bode well for the food inflation in coming months".

The government slashed import duty on edible oils from 20 per cent to 10 per cent on May 30, 2025. This move is likely to benefit retail consumers directly, as the reduction in costs is expected to be passed on to them, helping bring down edible oil prices in the next few weeks.

Additionally, the report highlighted that the monsoon season has started on a positive note. The southwest monsoon reached Kerala five days ahead of its normal schedule and has since advanced to many parts of the country.

In May 2025, India recorded 106 per cent more rainfall than the Long Period Average (LPA), indicating a strong start to the monsoon. The India Meteorological Department (IMD) has predicted that the monsoon will remain active during June.

However, the report also warned that heatwave conditions are likely to persist in northwest India in the first half of the month, which could impact weather-sensitive crops.

Despite these positive indicators, the bank cautioned that any extreme weather events like floods or droughts could still disrupt the current inflation trend and push food prices higher.

On the inflation front, the Consumer Price Index (CPI) inflation for May 2025 fell sharply to 2.82 per cent, the lowest since April 2019. This is a significant drop from 3.16 per cent in April 2025 and is well below both the bank's and market consensus estimates.

The fall was mainly driven by a sharper than-expected cooling in food inflation, especially in cereals and pulses. However, vegetable prices saw a slight increase after six months of continuous decline.

The overall outlook remains cautiously optimistic, with strong rainfall and policy support likely to bring relief on the inflation front, provided there are no major weather-related disruptions.

Reader Comments

R
Rahul K.
Finally some good news for middle class families! Cooking oil prices were pinching our pockets badly. Hope the duty cut benefit reaches consumers quickly. Monsoon progress is encouraging too 🙏
P
Priya M.
While the news is positive, I'm concerned about farmers. Lower edible oil prices might hurt domestic oilseed growers. Government should ensure MSP protection for them alongside import duty cuts.
S
Sanjay T.
Good monsoon = happy farmers = stable prices. It's that simple! But IMD must improve flood forecasting - last year's sudden floods in Bihar ruined so many crops. Prevention is better than cure.
A
Ananya R.
As a homemaker, I welcome any relief in kitchen budget! But why does government wait till prices become crisis? Proactive policies needed, not reactive ones. Still, better late than never 😊
V
Vikram S.
The 2.82% CPI is impressive, but let's not celebrate yet. Fuel prices are still high and global uncertainties remain. We need long-term solutions like better food storage to prevent volatility.
N
Neha P.
Early monsoon is blessing for agriculture sector! Hope distribution remains even across states. Last year some regions got floods while others faced drought - need balanced rainfall for stable prices.

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Tags:
food inflation edible oil prices monsoon forecast Union Bank of India import duty cut CPI inflation