Modal retail prices of three key vegetables – tomato, onion and potato – have firmed up in recent weeks, causing fresh worries that the costlier vegetables may stoke retail food inflation in the coming months.
According to the department of consumer affairs, retail prices of tomatoes were reported at Rs 30/kg on January 27, up 50% on year. Retail prices of onion and potato also rose at 20% and 33% to Rs 30/kg and Rs 20/kg respectively on an annual basis.
Current prices of potato and tomato are at the same level prevailed three months ago. Due to excessive rainfall in hilly states of Himachal Pradesh and Uttarakhand, inflation in tomato was record 202% in July on year when retails prices in several places touched Rs 100/kg.
The government intervened in the market and supplied tomatoes through retail outlets at Rs 70/kg. Tomato prices moderated in August and September before rising again in the next two months.
“Because of low base-effects, inflation in tomato and potato in the next few months are likely to rise,” an official told FE. Retail inflation in tomato and potato declined by 36% and 20% respectively in January, 2023 on year.
At present average onion prices retail prices at Rs 30/kg, a 25% decline from prices prevailed three months back. Last month, the government imposed a ban on onion exports to improve domestic supplies when prices rose by 74% on year. The government has been selling onion at Rs 25/kg across several outlets to cool down the prices.
Meanwhile, kharif arrivals of onion have pulled down mandi prices at Lasalgaon, the hub of the trade in Nashik, to Rs 1000/quintal on Saturday from Rs 2000/quintal prevailed at the beginning of the month.
Potatoes prices are likely to fall in the coming months because of robust production prospects. “With the exception of potato, supplies of tomato and onions spread across the year thus resulting in fluctuations in prices in case of supply constraints,” an official said.
Tomato, onion and potato have weightage of 0.6%, 0.6% and 1% in CPI inflation, respectively. Vegetable production rose to 213.88 million tonne (MT) in 2022-23 from 209.14 MT in 2021-22. Potato production is estimated to increase by 7% to 60.22 MT in the 2022-23 crop year compared to previous year.
However tomato output is projected to be marginally lower at 20.37 MT as against 20.69 MT in the said period. Potato is harvested in the rabi season during March-April; farmers put the crop in cold storages located across the key producing states of Uttar Pradesh, Punjab and West Bengal, which caters to the consumer demand throughout the year.
Onion crop harvested in the rabi season, which has a share of more than 65% in the production, is stored by farmers and gradually released in the market, while early kharif and kharif harvest enters the market directly in October and December, respectively, because of higher moisture content.