Sugar prices have begun to ease after last month’s sharp spike, but the decline has been uneven across the supply chain. Ex-mill prices have fallen 30% over the past month to Rs 4,450/quintal, while retail prices have declined 11-12% to around Rs 57.5/kg, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) said on Tuesday.
“A review of dispatch volumes reveals that the recent price surge was strictly temporary and confined to a very narrow window,” the sugar industry stated, adding that with retail prices witnessing a declining trend, further softening of prices of sweetener is expected in the coming weeks.
“While ex-mills prices have declined significantly since their peak last month, the fall in retail prices is not at the same pace,” Prakash Naiknavare, MD, NFCSF, told FE.
The average retail price of sugar stood at Rs 58.02/kg on Tuesday, up 25% year-on-year. However, retail prices have declined 3% since last month, according to the Department of Consumer Affairs’ Price Monitoring Cell.
The Food Ministry last week stated that retail sugar prices had declined by around 10% to Rs 58.50/kg from their peak of Rs 65/kg in August. However, ex-mill prices have already declined by nearly 25%.
“The slower decline in retail prices indicates that the benefit of the reduction in ex-mill prices has not yet been fully transmitted through the supply chain to the consumers,” according to an official note.
The sugar industry said mills have not reaped windfall gains from the recent increase in sugar prices, with a review of dispatch volumes indicating that the recent price surge was strictly temporary and confined to a very narrow window. “Between August 17 and August 31, 2026, sugar mills across India sold only about 0.72 million tonne (MT) at an average ex-mill price of Rs 4,996.98/quintal,” the industry stated.
The government had attributed the sharp spike in sugar prices to factors including a fall in domestic production due to weather-related damage, a demand spike ahead of the festive season, high global prices and hoarding by some producers.
The sugar industry, however, attributed the recent price spike to speculative buying by traders and bulk consumers, as well as lower-than-estimated production, while maintaining that there is no sweetener shortage.
Sugar production declined by 27% to around 28.1 MT in the 2025-26 season from 35.8 MT in 2021-22. Consumption increased marginally, according to industry estimates, to 28.7 MT from 27.3 MT over the last five seasons.
Prospects for opening sugar stocks in the 2026-27 season (October-September) have dipped to only 3.5 MT, the lowest in the last decade, also contributing to the rise in prices.
Last month, the government allowed duty-free imports of 1 MT of raw sugar for the first time in the last decade to augment supplies, alongside initiating a wider crackdown on hoarding and a move to cap sugar inventories held by bulk industries.