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Why Vegetable Prices Are Rising


As the food inflation in India is ruling at high levels, prices of tomatoes have over doubled in major cities within a year with its retail price in Delhi currently touching Rs 39 per kg as against Rs 15 per kg a year ago. The price of tomatoes has skyrocketed to Rs 77 per kg in Mumbai as compared with Rs 28 per kg last year, Rs 77 per kg in Kolkata against Rs 38 per kg a year ago, Rs 50 per kg in Ranchi vis-a-vis Rs 20 per kg in the previous year, according to government data.

Traders attributed the rise in tomato retail prices to likely tight supply from key growing states like Andhra Pradesh and Karnataka.

Another major vegetable potato’s prices are also ruling above the last year’s levels at Rs 22 per kg on June 1 as against Rs 20 as on June 1, 2021. The price of potato is at Rs 27 per kg now in Mumbai as against Rs 21 per kg a year ago, Rs 27 per kg in Kolkata against Rs 16 a year ago, Rs 20 in Ranchi as compared with Rs 17 in the previous year, the data show.

However, the price of onion is lower now as compared to last year. Its price in Delhi as of June 1 stood at Rs 24 per kg as compared with Rs 28 per kg as of June 1, 2021. It currently stands at Rs 18 per kg in Mumbai as against Rs 25 a year ago, Rs 23 per kg in Kolkata as compared with Rs 27 per kg last year, Rs 18 per kg in Ranchi as against Rs 25 in the previous year, according to the data maintained by the consumer affairs ministry.

Madhavi Arora, lead economist at Emkay Global Financial Services, said, “Food inflation (8.4 per cent year-on-year; 1.6 per cent month-on-month) led the April spike in headline retail inflation, marking the highest print in 17 months, driven by fruits, edible oils and cereals. While fruits may see seasonal swings ahead, edible oils and cereals may stay high going ahead as well, owing to the Indonesia ban and heatwaves, respectively.”

Arora added that while pulses, sugar, and vegetables were sequentially lower, mandi prices show select pressure on vegetable prices in the coming month even as other perishables may remain high. The summer months should see a seasonal rise in food prices, while higher transportation costs may further add to the woes.

“Energy inflation at 10.8 per cent (3.5 per cent month-on-month) seems to show significant pass-through of oil pain, while cooking gas and kerosene also increased sharply. Electricity tariff increases seen in April could see a leg up further, as states may implement the proposed hikes,” Arora said.

The retail inflation, based on the Consumer Price Index (CPI), in April soared to an eight-year high of 7.79 per cent, compared with 4.23 per cent in April 2021 and 6.97 per cent in March 2022. Inflation in the food basket rose to 8.38 per cent in April, from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.

The retail inflation is above the RBI’s target limit of 2-6 per cent. The rising inflation in the country is forcing the RBI’s Monetary Policy Committee to go for rate hikes. The upcoming meeting of the MPC is scheduled for June 6-8.

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