How India’s Food Prices Rose This September

Sustained low prices in past years pushed farmers away from onion, experts say, while the government lists factors such as increased demand and speculation for the increase in sugar prices.

“Extreme climate events are raising agricultural risk, disrupting the global food system, increasing the chance of multiple breadbasket failure and pushing up food prices around the world,” a September 2026 analysis by Zero Carbon Analytics noted, adding that “historically unprecedented heat, drought, rain and cold are causing food price spikes across all continents”.

It also noted that perishable foods such as fruits and vegetables can face larger price swings because of their limited shelf life and more vulnerable supply chains.

ISignal reached out to the Department of Consumer Affairs for comment. We will update this report when we receive a response.

Onion farmers cut back after low prices

The retail price of onion in September was Rs 52.8, the highest monthly average price since November 2024. Further, since 2014, average monthly prices were higher than this on only eight occasions, our analysis shows. Prices more than doubled since May this year.

Last September, retail prices of onion were Rs 27.4, the lowest for that month since 2022.

“Onion prices remained low for two to three years. At times, the farmer could not even recover the cost from harvesting the onion, transporting it and taking it to the market, resulting in a negative return,” said Sominath Gholwe, an agricultural researcher. “Because of this, some farmers turned away from onion cultivation.” He explained that it now costs at least Rs 12.5 to produce and bring 1 kg onion to the market, up from around Rs 10.

Onion crop is harvested in three seasons: rabi in March-May; kharif in September-November and late kharif in January-February.

“Along with Maharashtra, onions are stored in large quantities in Madhya Pradesh, Gujarat and Rajasthan, and stocks have been lower there this year as well because many farmers did not store onions after last year’s low prices,” Ritesh Poman, an onion trader at the Pune Agricultural Produce Market Committee (APMC), said.

Kharif onion is important for price stability “during the lean months between rabi and peak kharif arrivals”, the Ministry of Consumer Affairs, Food & Public Distribution explained in a June 2024 press release. Government estimates put onion production at 30.74 million tonnes in 2025-26, comparable to the 30.77 million tonnes the year before.

Poman also expects the new crop to arrive later than last year, and says “its quantity will be much lower”.

This year, the government procured 121,000 tonnes of rabi onion for its 2026-27 buffer stock, against a target of 200,000 tonnes, and began releasing onions at Rs 35 per kg.

“The government buffer stock has not made much difference in our market,” Poman said. “The stock is being sent through rakes from Lasalgaon to markets such as Mumbai and Azadpur.”

Gholwe said that last year, the National Agricultural Cooperative Marketing Federation of India (NAFED) bought and stored onions, then released them as farmers’ stocks ran down, which kept prices stable.

Sugar prices peaked in August

September sugar prices have risen every year since 2019. Last month, 1 kg sugar retailed at Rs 59.2, on average, 51% above Rs 39.1 in 2019. About two-thirds of this increase came in the last one year.

The government attributed higher prices to lower-than-expected production, increased demand, weather-related crop damage, tightening global supplies, and speculation and hoarding. This week, the government revised stock-holding norms, a move aimed at “curbing hoarding, discouraging speculative trading and preventing accumulation of sugar stocks by dealers”.

Addressing concerns that the price hike is due to the use of sugarcane in ethanol, the government said, “The share of sugar diverted for ethanol production has declined from around 12% in 2022-23 to around 9% in 2025-26. Moreover, nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize.”

Maize was not used to make ethanol in 2021-22 but by 2025-26, it contributed to 37% of production. This has led to an increase in prices of bird feed for poultry farmers, who are struggling to choose between passing these costs on to consumers or absorbing losses, as ISignal explained in September.

Agriculture ministry data show that sugarcane production had risen from 454.6 million tonnes in 2024-25 to 500 million tonnes in 2025-26. Gholwe attributed the increase to higher rainfall last year. He expects El Niño to affect next year’s cane in drought-prone areas that depend on borewell and well water.

Shekhar Gaikwad, retired sugar commissioner of Maharashtra, said higher sugarcane production does not necessarily translate into higher sugar production. “The growth of sugarcane was affected because there was rain in June, when the crop was growing vigorously, but there was no rain in July, August and September. The stalks became smaller and their number also declined,” he said.

One tonne of sugar can be produced from 10 tonnes of sugarcane. This year, the government estimates that sugar production will reach 30.6 million tonnes, 11% below the initial estimate of 34.3 million tonnes, due to Red Rot and Top Borer disease, and waterlogging caused by excess rain.

Sugar prices rose from Rs 48.18 per kg on July 20 to Rs 55.70 on August 20, and peaked at Rs 65.05 on August 26, according to Food Price Watch data. By September 20, they fell 11.5% from the peak to Rs 57.54.

Gholwe said mills were not allowed to issue tenders for two months, “and sugar prices rose sharply”. He explained that the stock that the mills had stored was released all at once.

“The mills had sold their August sugar in the normal course, but the traders did not lift it,” Gaikwad said. “The government then required the sugar to be lifted within seven days. Once that sugar came into the market, the rates came down.”

To increase availability, the government has imposed a 400-tonne stock limit on sugar dealers, limited bulk consumers to 15 days of consumption, ordered physical verification of sugar stocks, allowed duty-free imports of 1 million tonnes of raw sugar, and advised sugar mills to begin crushing from October 15.

Gaikwad said the 1-million-tonne import is not much. “After January, when the mills stop, people will calculate that we need around 300 lakh tonnes but production was only around 275 lakh tonnes. So traders will speculate. Prices could rise again after the season ends,” Gaikwad explained. “There is a psychological benefit to starting the factories early: people feel that the factories have started and sugar will be produced every day. But the amount and quantity of sugar produced will still be lower. Next year, I think we may have to import more than 20 to 30 lakh tonnes. There is no other way.”

Staples stay costly

The retail price of rice has risen every September since 2015 except in 2025. The 2026 price of Rs 46.1 per kg is 7.7% above 2025.

This is even as rice production rose 2.6%, from 150.2 million tonnes in 2024-25 to 154 million tonnes in 2025-26, as agriculture ministry data show. Central rice stock also rose 3.1%, from 37.6 million tonnes in September 2025 to 38.8 million tonnes last month, according to Food Corporation of India (FCI) data. With a weak monsoon this year, kharif rice sowing is down 16% from last year, estimates show.

All five edible oils cost more in September 2026 than a year earlier, and each was at its highest September price since 2019. On September 24, the government said a sharp increase in international edible oil prices had raised the landed cost of imported oils and domestic retail prices. It cut the basic customs duty on crude sunflower oil to zero and on crude soybean and palm oil to 5% to lower domestic prices.

India meets only 44% of its domestic demand for edible oil and spends more than $20 billion a year on imports, as ISignalexplained in June 2026.