Context: A sharp increase in the retail prices of several crucial food items over the past one month — from the essential vegetables of tomato, onion and potato to the basic cereals of rice and wheat, tur dal, the commonest protein source in vegetarian households, and even loose tea — has left households and small eatery operators scrambling to juggle their budgets.
Trends in Food Prices
Data from the Ministry of Consumer Affairs, Food and Public Distribution’s Price Monitoring Division show that prices of 9 of the 10 key food items — rice, wheat, tur dal, sugar, milk, tea (loose), salt (iodised, packed), potato, onion and tomato — had increased from a month earlier. The price of salt alone was unchanged.
- While the 0.5% month-on-month increase in milk price was the least, the prices of all three essential vegetables had risen, with potato up 8.8%, onion 11.1% higher and tomato almost twice as high as in the last week of May.
- The national average retail price of tomato on June 29 was ₹53.59 per kilogram, 95% higher than ₹24.37 a month earlier.
- The price of tur dal, a key protein source in the diets of vegetarian households, continues to keep rising; it had climbed 7.8% month-on-month to ₹130.75 a kilogram on June 29.
Factors affecting the supply of vegetables this year
- Demand-Supply Gap: Across the country, tomatoes are grown and harvested at different points of year. This results in demand-supply gaps.
- Weather Disturbances: Further, this shortage gets compounded by weather disturbances.
- Perishable nature of vegetables: Non-availability of cold chain infrastructure.
- Logistical challenges: When it rains, transportation becomes an issue,
- Higher temperatures & Rainfall: high temperatures this year as well as unusually sharper rain spells more recently, especially in northern States
- Uncertainty of Monsoon: With the monsoon rains 13% in deficit so far this year, and the outlook for spatial and temporal distribution in the coming months clouded with uncertainty by the El Niño.
Conclusion
- Due to El-nino, there is a real risk that food prices could cause retail inflation to accelerate again. Hence, the policymakers need to retain laser focus on taming inflation.
