Can Onion Prices Be Tamed? Centre Plans Buffer Stock Release From September

The central government plans to start a calibrated release of onion buffer stocks beginning September 2026 to bridge the festive supply gap. The intervention targets the high-consumption period stretching from Durga Puja through the end of December 2026, a report by Mint said.

Fresh kharif onions typically arrive in November and December. Markets rely entirely on stored rabi onions until the fresh harvest reaches the mandis. 

Queries sent to the Department of Consumer Affairs remained unanswered till press time, the publication reported

"By augmenting market supplies, the objective is to discourage hoarding and speculative trading, improve availability across major consumption centres and keep food inflation under control," Mint reported citing a government source.

Rising Retail Pressures

Retail and wholesale onion prices have surged across the country. The all-India average retail price reached ₹34.51 per kg on 18 July 2026, rising 22.2 per cent year-on-year from ₹28.25 and 26 per cent from ₹27.39 the previous month, the Department of Consumer Affairs stated.

Wholesale markets recorded steeper hikes. The all-India average wholesale price climbed to ₹2,716.21 per quintal, marking a 22 per cent annual increase from ₹2,225.67 and a 30.3 per cent monthly jump from ₹2,084.83.

Retail rates in several local markets have crossed ₹50 per kg. Prices stood at ₹43 in Delhi (up from ₹33 a year earlier), ₹37 in Mumbai (compared with ₹33), ₹40 in Chennai (up from ₹32) and ₹27 in Ranchi (from ₹25).

The price rally is inflating household budgets. Crisil Intelligence's Roti Rice Report stated a 5 per cent year-on-year rise in the cost of a vegetarian thali in June. Non-vegetarian thali costs increased 6 per cent during the same period, driven primarily by onions.

Procurement and Logistics

The government has set a target to procure 2 lakh tonnes of onions for the state buffer stock. To boost procurement, the Centre raised the buying price by 13 per cent on 4 July 2026. The new rate stands at ₹2,125 per quintal, up from ₹1,875.

As per the report, a team from the Department of Consumer Affairs recently visited Nashik, the country's largest onion-producing and trading hub, and other key growing states to evaluate procurement operations and storage conditions.

"The ministry's team also assessed storage conditions and the quantity of marketable stocks available for phased release during the upcoming festive and wedding season," another source cited in the report said.

The government will deploy the stocks through wholesale markets, state governments and cooperative agencies. Subsidised retail outlets like Safal and dedicated mobile vans will also sell the produce directly to consumers.

Inflation and Market Impact

Rising onion prices threaten to accelerate headline inflation. Onions carry a weight of 0.7006 per cent in the overall Consumer Price Index basket, based on the revised 2024 series.

CPI-based retail inflation quickened to 4.38 per cent in June from 3.93 per cent in May.

The print breached the 4 per cent medium-term target set by the Reserve Bank of India for the first time since January 2025. It was also the first reading above the target under the revised CPI series with January 2026 as the new base year.