Tomato and onion fuelling thali inflation, prices surged 38-71% in a month

Central Delhi resident Savita Patwari says that her morning visit to the local vegetable shop spoils her mood as the prices of most of vegetables, including tomato and onion, are on the rise.

“I bought tomato at ₹70 a kg on Wednesday, and now on Saturday I am paying ₹74. Similarly for onion, it has gone up from ₹52 to ₹54 a kg just in three days,” Patwari, a government employee with a family of five, complained. She also found that a kg of cauliflower is being sold at ₹85 and prices of other green vegetables are also too high. Savita’s friend and housewife Ritika has another complaint. “If one wants to substitute raw tomato with tomato puree, even that is not cheaper.”

Just like Savita and Ritika, many people across India are facing the problem of rising vegetable prices, especially in last 15 days. This is also evident from data compiled by the Ministry of Food and Consumer Affairs, which recorded the maximum retail price of onions surged to ₹80/kg on October 15 from ₹40/kg on October 1. Similarly, the maximum prices of tomatoes jumped from ₹60/kg to ₹301/kg!

Since, analysts say trend of maximum and minimum prices on a daily basis may be right tool to observe price trend, considering prices in one specific city might be exaggeration, so it would be better to read the trend in average retail prices data of Ministry of Food and Consumer Affairs would be better option. BusinessLine went through this data and found price of tomatoes has gone up between 71 to 143 per cent on monthly basis since April. For onions, the range is 38-62 per cent and for potatoes it is 5-14 per cent.

Reasons for price rise

Vegetable traders list mainly two reasons for higher price. “On the one hand, unseasonal rain disturbed the supply, on the other hand increasing prices of fuel too had impact on overall price,” one Delhi based trader said. He said there is not much change in demand, still he thinks prices will continue to be on rise for some time.

Devendra Kumar Pant, Chief Economist with India Ratings & Research (Ind Ra), says that the present situation is cyclical. “We have seen a trend there will be one year of bumper crop followed by lower crop next year. When there is bumper crop, prices at farm gate crashes, forcing farmers to dump or destroy the crop and following year there will be less sowing. However, lower supply will push the price and will prompt to go for higher sowing and the trend continues,” he said, while adding that once new crop arrives in the market, the price is expected to come down.

This trend comes even as the retail inflation based on Consumer Price Index (CPI) showed that vegetable prices declined by over 22 per cent. Even the producers’ inflation based on Wholesale Price Index (WPI) showed vegetable prices declined by 32.4 per cent, which is the sharpest fall in this group in the 2011-12 series.

Pant said that raw material in form of vegetable saw a deflation of 4 per cent on month-on-month basis, but such raw material based manufactured products recorded inflation of 1.1 per cent. This means buying tomato puree is unlikely to give comfort.

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