Prices of common vegetables, which typically fan inflation during the monsoon months, have eased to their lowest levels in three years on account of higher output, helping to keep a lid on middle-class angst.
Cheaper onion and potato, despite supply-disrupting torrential rains, have come as a relief for policymakers and consumers. Vegetables such as tomato, onion and potato tend to stoke volatility during the rainy months, keeping headline inflation under pressure.
Potato and onion prices declined 31% and 37% year-on-year, according to data from government’s price monitoring cell. Expected robust harvests of the potato have calmed markets after a supply crunch last year, when output shrunk nearly 7%, pushing prices up.
Yet, tomato prices edged up in July and August, reaching ₹85 a kg towards July-end, and then falling to ₹73 per kg by mid-August. Tomatoes are highly perishable and the spike came amid heavy rain across several states. A fall in other commonly consumed vegetables offset the rise in tomatoes as consumer inflation in July stood at 1.55%, the lowest in eight years.
“This monsoon, vegetable prices have been far more affordable than last year, although some items have remained costly,” said Kanchan Tyagi, who mostly orders vegetables on quick-commerce platforms.
{{/usCountry}}“This monsoon, vegetable prices have been far more affordable than last year, although some items have remained costly,” said Kanchan Tyagi, who mostly orders vegetables on quick-commerce platforms.
{{/usCountry}}Per plate food costs moderated in August, with a decline in the costs of vegetarian and non-vegetarian thalis of 7% and 8% on-year, a Crisil Intelligence report said, based on its proprietary monthly “roti, rice rate” indicator.
The lower prices were driven by cheaper onion, potato and pulses. Onion output this year is expected to be 30.7 million tonne, up 27% compared to the previous year, the food ministry had said last week. Production of potatoes is estimated to be 3-5% higher after poor harvests last year due to widespread pest attacks and weather shocks.
According to Crisil’s data, an 18-20% rise in annual onion output has led to a fall in prices this year. Prices of pulses too declined 14% on-year. Rates have been benign for non-veg households too. The cost of an average home-cooked non-vegetarian meal fell 8% mainly driven by a 10% drop in broiler prices, Crisil’s tracker showed.
To keep supplies steady, the Centre has begun releasing onions from its own stock of 300,000 tonne purchased from farmers. On Sept 4, Union food minister Prahlad Joshi launched retail sales of the vegetable at ₹24 a kg in the national capital region, Mumbai and Ahmedabad.