Consumption hit as kitchens feel the heat of LPG shortage

Pune: India’s food consumption is showing early signs of strain as the Iran-Israel conflict disrupts LPG availability, squeezing both households and businesses that rely on gas for daily cooking.

Consumption across key food commodities has weakened over the past three weeks, led by a sharp pullback from hotels, restaurants and the country’s vast network of street food vendors, a key driver of edible oil, flour and poultry demand, especially in the unbranded segment.Wheat flour sales have fallen 5-7%, reflecting reduced offtake from bread and biscuit makers, while cooking oil demand is down about 6%.

“The demand for refined wheat flour (maida) from the bakery industry for bread and biscuits has reduced by about 5-7% since last 15-20 days due to the shortage of LPG fuel and is feared to go down further,” said Rohit Khaitan, vice president at the Roller Flour Millers’ Federation of India. “With the new crop already in the market, this may put the prices of wheat further under stress.”

The pressure is most visible in the edible oil market, where the bulk consumers have cut purchases. Hotels, restaurants and catering services along with millions of street-side vendors typically consume about 3.5 lakh tonnes of palm oil and 1.5 lakh tonnes of soybean oil each month.

That demand has shrunk.”The consumption of palm oil by hotels, restaurants and canteens has declined by 40%… while soybean oil consumption is down by about 25%,” said Sandeep Bajoria, chief executive officer at Sunvin Group. Overall, demand from institutional and small food businesses has fallen 30-35%, he said.Yet prices haven’t eased.

“Although edible oil consumption has declined due to reduced demand from hotels and restaurants, the increase in freight, forex and fuel prices are keeping cooking oil prices firm in the off season,” said BV Mehta, executive director of the Solvent Extractors’ Association of India.

The disruption indicates the critical role of informal food networks from office canteens to roadside stalls in driving commodity demand. With LPG supplies constrained, many of these operators have cut hours, trimmed menus, or temporarily shut shop, hitting consumption at the margin.

Demand for gram flour, or besan, a staple for India’s fried snacks, has dropped 10-12% as roadside eateries and small food businesses scale back or shut operations due to fuel shortage.