In a welcome trend for Indian consumers, vegetable oil prices are approaching their 2024 lows after a surge earlier in the year. This is an important foodstuff for the world's most populous country: India is the world's second-largest importer of vegetable oil, which accounts for 3% of the nation's total merchandise imports.

Our first chart tracks palm oil, sunflower oil, mustard oil and soya oil prices on India's key commodity exchange. (For even more commodities, our final heat map shows the breadth of NCDEX spot prices.)

If you are a CEIC user, access the story here.

To explore the roots of this price movement, we travel to the key sources of palm oil: Malaysia and Indonesia, which together account for 80% of global exports. Palm oil tends to be a benchmark for prices of the other vegetable oils.

In Malaysia, production has surged recently. The year-on-year rate of change has reached a multi-decade high, and agricultural yields have also risen to a 13-year peak.

A chart of palm oil inventories in Malaysia shows the depletions of early 2024, which coincided with stagnant production. Higher biodiesel production in Indonesia was also a factor.

If you are a CEIC user, access the story here.

Returning to India, recent figures showed that retail inflation eased slightly in April as cheaper fuel was somewhat offset by more expensive food. With vegetable oils accounting for 3% of India's CPI basket, easing prices could result in a more restrained inflation print for May. 

As we wrote last week, inflation is a perennial concern in India, with the cost of living often outpacing working-class wage gains. And with India's voters in the middle of the nation's multi-week election, we invite you to revisit our overview of the economy over Narendra Modi's decade in power.

If you are a CEIC user, access the story here.

If you are not a CEIC client, explore how we can assist you in generating alpha by registering for a trial of our product: https://hubs.la/Q02f5lQh0