Inflation: Onion, Gold, and Silver Batting Together on the Price Field

KKN Gurugram Desk | Inflation continues to remain a topic of concern for the Indian economy, with significant fluctuations in prices across various commodities. While prices of some essential food items have witnessed a decline in recent months, others, such as onions, gold, and silver, are surging. The month of February 2025 brought notable price increases in these commodities, creating mixed reactions among consumers and market experts.

Prices Soar for Onion, Gold, and Silver

Onion, an essential vegetable in Indian kitchens, has seen a remarkable price surge of 30.42 percent in February 2025 compared to January 2025. The rising price of onions, which had already been a source of concern in the previous months, has continued to climb. The sharp rise in onion prices comes at a time when other essential commodities, like gold and silver, have also seen significant price hikes.

Gold prices have surged by 35.56 percent from January to February, marking a steep increase, while silver prices have increased by 30.89 percent. These dramatic increases in gold and silver prices have further contributed to inflationary pressures, which are deeply affecting the purchasing power of common people.

Decline in the Prices of Vegetables and Food Items

In contrast to the soaring prices of gold, silver, and onions, February 2025 has witnessed a decline in the prices of several other food items, especially vegetables. The fall in vegetable prices has resulted in a reduction in overall retail inflation, particularly at the urban and rural levels.

Onions may be experiencing price hikes, but other vegetables, such as tomatoes, cauliflower, and garlic, have seen substantial price drops. For example, ginger prices have fallen by 38.81 percent, while cumin (jeera) prices have dropped by 28.77 percent. Tomato prices have also seen a sharp decline of 28.51 percent. Similarly, cauliflower prices have decreased by 21.19 percent, and garlic is now 20.32 percent cheaper than in January.

This overall decline in the prices of vegetables has contributed to a reduction in the food inflation index, which is a positive sign for households in both urban and rural areas.

Food Inflation at Its Lowest Since May 2023

One of the key highlights of the February 2025 inflation data is the significant decline in food inflation. Compared to January 2025, food inflation in February 2025 saw a notable reduction of 2.22 percent. The food inflation rate in February is the lowest recorded since May 2023. The primary reason for this decrease is the substantial fall in vegetable prices.

However, despite this positive trend, the prices of onions continue to remain high, and no significant relief has been observed in the cost of this crucial vegetable. Nonetheless, other food items have contributed to reducing the overall food inflation, helping to ease the burden on consumers.

Pulses and Spices Also Become Cheaper

Apart from vegetables, the prices of pulses and spices have also seen a decline. The price index for pulses dropped by 7.6 percent, while the price index for spices saw a slight dip of 1.9 percent. Similarly, the overall food and beverages price index recorded a reduction of 3.3 percent in February 2025 compared to January 2025.

These reductions in prices, particularly in pulses and spices, have contributed to a reduction in overall food inflation, which is a relief for many households that rely on these essential items for their daily meals.

Inflation Rate Below Expectations

Economists and financial institutions had anticipated a decrease in inflation during February 2025. While the general consensus was that inflation would remain below 4 percent, the actual rate turned out to be lower than expected. According to data released by the Ministry of Statistics and Programme Implementation, the inflation rate in February 2025 stood at 3.61 percent. This figure is much lower than the anticipated 3.9 percent, offering some relief to consumers.

This decrease in inflation is expected to leave more money in the pockets of consumers, which can potentially boost overall economic activity. With more savings available, consumers may spend on other essential goods, thereby contributing to the economy’s growth. Additionally, this reduction in inflation is likely to ease the pressure on the government, which has been under scrutiny for rising prices.

Price Trends in February 2025

In February 2025, some of the most expensive commodities were coconut oil, gold, silver, and onions. The price of coconut oil shot up by 54.58 percent, while the price of coconuts themselves increased by 41.61 percent. Gold and silver, as mentioned earlier, witnessed price increases of 35.56 percent and 30.89 percent, respectively. Meanwhile, onions saw a price increase of 30.42 percent, making them one of the most expensive food items of the month.

On the other hand, several food items experienced significant price declines, as mentioned earlier. Among these, ginger, cumin, tomatoes, cauliflower, and garlic experienced some of the steepest reductions in prices, offering some relief to consumers struggling with high food inflation.

Rural and Urban Inflation Comparison

Retail inflation at both rural and urban levels showed a mixed trend in February 2025. Rural inflation was recorded at 3.79 percent, which is a decrease from 4.59 percent in January 2025. In urban areas, the food inflation rate was 3.32 percent, compared to 3.87 percent in the previous month.

The food and beverages inflation rate also showed a decline, with February 2025 witnessing a rate of 3.84 percent, down from 5.68 percent in January. The reduction in the overall inflation rate, especially in food and beverages, is a positive development for households across the country, which have been grappling with high food prices in recent months.

Food Inflation Trends: February vs January

Here is a quick comparison of food inflation trends for the months of February and January 2025:

• Food Inflation Rate:
  • February 2025: 3.75 percent
  • January 2025: 5.97 percent
  • December 2024: 8.39 percent
  • November 2024: 9.04 percent
  • October 2024: 0.87 percent
  • September 2024: 9.24 percent
  • August 2024: 5.66 percent
  • July 2024: 5.42 percent

As seen in the data, food inflation has steadily decreased from December 2024 through February 2025, marking a significant decline over the last few months. The drop in food inflation is a welcome relief for consumers, and the government may take additional measures to ensure that prices continue to stabilize.

In conclusion, while inflation continues to be a concern for many households across India, there have been some positive trends in the food sector. The decrease in food inflation, particularly in vegetables and pulses, has provided much-needed relief to consumers. On the other hand, the significant price hikes in gold, silver, and onions are areas of concern, and these trends need to be monitored closely.

As inflation continues to fluctuate, it is essential for both the government and consumers to adapt to these changing conditions. For the time being, the reduction in food prices, especially vegetables and spices, offers a glimmer of hope, while the rise in prices of gold, silver, and onions remains a pressing issue.