Onion will increase the difficulties of common people in Diwali, inflation may remain above 6%

Just before the festival of Diwali, the rising price of onion has increased the problems of the people. The kitchen budget may have increased for the common man, but onion has so much power that it has the power to increase the inflation rate in the country's economy.

Just before Diwali, the rising price of onion has increased people's kitchen budget. But the matter is not going to stop here, the rising prices of onion have the power to shake even the government in the country. At present, this can take the inflation rate in the country to the level of 6 percent. While this will impact the country's economy in the coming months, people's loan interest rates may also increase.

If we look at only 8 days of November, onion prices have increased by 75% so far as compared to October. Due to this, the inflation rate may reach the level of 6% in the coming months, due to which it is possible that the Reserve Bank of India may also change the repo rate.

Will October figures also show inflation?

Quoting experts from Nomura, ET's news said that the retail inflation rate in October could be 5.3 percent. In September it was only 5%. Due to this, the country's core inflation rate may touch the level of 6% in November and December. Inflation was expected to come down due to the fall in tomato prices in October, but by the end of October, a rise in the prices of vegetables was seen. Onion prices are continuously increasing.

This is how onion affects inflation

When retail inflation rate is measured in the country, Consumer Price Index is created for it. A part of this index is also the Food Price Index, in which the prices of tomatoes, onions and potatoes have weightage. The weightage of onion in the basket that determines retail inflation rate is 0.64 percent. Whereas the weightage of tomato is 0.57 percent. Therefore onion prices affect the inflation rate.

The government has a buffer stock of 5 lakh tonnes of onion. Out of this, by the end of October the government has released 1.70 lakh tonnes of onion in the market. In the coming days, the government may release more onions in the market to bring down inflation.