Vegetable prices ease across the board

    Vishwanath Kulkarni
    Harish Damodaran
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Will help rein in inflationary expectations among consumers

Policymakers, economists and India Inc heaved a sigh of relief when the consumer price index (CPI) data for December showed annual inflation in vegetables fall to 38.76 per cent from a record 61.6 per cent the previous month.

Well, they’ll be thrilled when the data for January is out in less than a month’s time.

Most vegetables – onion, cauliflower, cabbage, carrot, bottle gourd, brinjal, peas, radish and beans – are currently retailing not just below their November peaks, but even their January 2013 levels.

Prices are ruling higher than a year ago only in a few vegetables, according to information accessed from a leading modern-format retailer for the National Capital Region. Even in their case – potato, tomato and capsicum, for instance – prices have dropped considerably since November (see table).

These could translate into low single-digit, if not negative, inflation in vegetables for January. Given the already low/negative CPI inflation rates for pulses (2.15 per cent in December), edible oils (0.7 per cent) and sugar (minus 5.61 per cent), it may further reinforce an easing of price pressures in food items.

“Vegetables prices matter for inflationary expectations among consumers since these, unlike say white goods, are bought on a daily basis,” said Devendra Kumar Pant, Chief Economist at India Ratings & Research.

Normalcy restored

Pradipta Sahoo, Business Head (Horticulture) of Mother Dairy Fruit & Vegetable Pvt Ltd, attributed the decline in vegetable prices to the end of an extended period of weather aberrations.

“In 2013, the Monsoon arrived early and left late. The prolonged rains disrupted cropping cycles, more so in vegetables where harvesting got delayed. The impact of it all got concentrated in November,” he said.

But now, with weather conditions stabilising, the positive effects of a good monsoon are being felt through increased vegetable arrivals across all mandis. “We are actually seeing a glut developing,” said Sahoo.

Onion-potato effect

The price turnaround in vegetables originated with onions, where Cyclone Phailin in October and the ensuing unseasonal rains led to the crop in Andhra Pradesh and Karnataka being harvested about three weeks late.

Once that crop started arriving, onion prices at Lasalgaon — the main reference mandi — fell from over Rs 50/kg in mid-October to Rs 17-18 by end-November and Rs 9-10 at present.

Next to follow was potato, where prolonged monsoon rains pushed forward the normal late-September/early-October Rabi sowings by 15 days.

“For a country that consumes one lakh tonnes daily, it meant meeting the demand for that unforeseen extra 15 days from the earlier crop kept in cold storages. Prices, therefore, spiked in November,” said Hemant Gaur of Siddhivinayak Agri Processing, a potato supply chain company.

But with the same late-sown 90-day crop starting to arrive, wholesale prices in Agra halved from Rs 13.5-14 to 7-7.5/kg between November and now.

Once onion and potato prices fell, the effects have spilled over to other vegetables — a “normal cross-price elasticity of demand phenomenon,” as Gaur pointed out.

(This article was published on January 19, 2014)
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Union Budget 2014-15 Highlights

  • Following are the highlights of the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in Parliament on July 10, 2014
  • Income-tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh
  • Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.
  • Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh
  • Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.
  • Committee to look into all fresh tax demands for indirect transfer of assets in wake of retrospective tax amendments of 2012
  • Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6% in FY 16
  • Rs 150 crore allocated for increasing safety of women in large cities
  • LCD, LED TV become cheaper
  • Cigarettes, pan masala, tobacco, aerated drinks become costlier
  • 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan
  • 5 more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
  • 4 more AIIMS like institutions to come up in AP, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP
  • Govt proposes to launch Digital India’ programme to ensure broad band connectivity at village level
  • National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed
  • Rs 100 cr scheme to support about 600 new and existing Community Radio Stations
  • Rs 100 cr for metro projects in Lucknow and Ahmedabad
  • Govt expects Rs 9.77 lakh crore revenue crore from taxes
  • Govt’s plan expenditure pegged at Rs 5.75 lakh crore and non-Plan at Rs 12.19 lakh crore.
  • Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’
  • Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched
  • FDI limit to be hiked to 49% pc in defence, insurance
  • Disinvestment target fixed at Rs 58,425 crore
  • Gross borrowings pegged at Rs 6 lakh crore
  • Contours of GST to be finalised this fiscal; Govt to look into DTC proposal.
  • ‘Pandit Madan Mohan Malviya New Teachers Training Programme’ launched with initial sum of Rs 500 crore
  • Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants
  • Set aside Rs 11,200 crore for PSU banks capitalisation
  • Govt in favour of consolidation of PSU banks
  • Govt considering giving greater autonomy to PSU banks while making them accountable
  • Rs 7,060 crore for setting up 100 Smart Cities
  • A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.
  • Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology
  • Expenditure management commission to be setup; will look into food and fertilizer subsides
  • Impasse in coal sector will be resolved; coal will be provided to power plants already commissioned or to be commissioned by March 2015
  • Long term capial gains tax for mutual funds doubled to 20%; lock-in period increased to 3 years
  • Rs 4,000 cr set aside to increase flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
  • EPFO to launch the ‘Uniform Account Number’ service to facilitate portability of Provident Fund accounts
  • Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000
  • Minimum pension increased to Rs 1,000 per month
  • Union Budget 2014: List of products getting cheaper/ costlier

  • Finance Minister Arun Jaitley today spared the common man from price hikes by keeping duties on commonly used day-to-day items unchanged but made it costlier for smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2014—15.
  • Following is a list of what will be cheaper and costlier:
  • CRT television
  • LED/LCD TVs especially below 19 inch
  • Footwear priced between Rs 500 to Rs 1,000 per pair
  • Soaps
  • E—book readers
  • Desktop, laptops and tablets
  • RO based water purifiers
  • LED Lights, fixtures and lamps
  • Pre forms of precious and semi—precious stones
  • Sports Gloves
  • Branded petrol
  • Matchbox
  • Life micro insurance policies
  • HIV/AIDS drugs and diagnostic kits
  • DDT insecticides
  • Cigarettes
  • Aerated drinks with sugar
  • Pan masala
  • Gutka and chewing tobacco
  • Jarda scented tobacco
  • Radio Taxi
  • Imported electronic products
  • Portable X—ray machines
  • Half cut/broken diamonds.


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