India and Bangladesh suffer from lack of onions
The countries banned onion export, yet the price keeps rising in tenths of percent.
While common price of a kilo costs about 20 rupees, today the basic ingredient of any Indian dish costs more than double. The price skyrocketing is caused by huge loss of last year crop due to heavy rains and flooding. The onion price has been on the rise since January.
The Indian government banned onion export and as such the “onion crisis“ poured into importing countries, especially Bangladesh, UAE and Malaysia. The government also decided to release part of its onion supply. Both the measures are expected to calm down the market and help reduce the price. The shift is expected to take place in February, when new crops will reach the market.
The rapid onion price increase reflected in the overall increase in consumer prices. The value of Indian inflation broke 4 percent level, which is the target level for Indian Central Bank. The natural reaction should be interest rate increase. Yet, Reserve Bank of India hesitates to do so, because such a change could slow down the Indian economy even more.