Surge in Tomato Prices to Rs 90 Per Kilogram: A Deep Dive into the Factors and Implications
In recent days, a dramatic increase in tomato prices has captured the attention of citizens and policymakers alike, as the cost of this essential kitchen staple has surged up to Rs 90 per kilogram across various cities in India. This price hike is having far-reaching effects on household budgets and is likely to impact millions of families who rely on tomatoes as a key ingredient in their daily meals. Here’s a detailed examination of the factors driving this increase and its broader implications for the economy and consumer behaviour.
Tomato Prices Reach New Highs
According to a report from The Economic Times, the price of tomatoes, a fundamental component of Indian cuisine and a staple ingredient in numerous curry dishes, has soared to an unprecedented Rs 90 per kilogram in several cities across the country. This steep rise in prices is being observed not only in metropolitan areas like Delhi-NCR and Mumbai but also in smaller cities and towns nationwide. The significant increase in tomato prices has sparked concern among both consumers and market analysts, highlighting the challenges facing India’s agricultural supply chain.
Contributing Factors to the Price Surge
Several key factors have been identified as contributors to the sharp rise in tomato prices:
1. Severe Heatwave Conditions: Prolonged and intense heatwaves in major tomato-producing states such as Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu, and Kerala have severely affected tomato cultivation. High temperatures have disrupted the growth and harvest of tomatoes, leading to a notable reduction in their availability.
2. Reduced Tomato Arrivals: The extreme heat conditions have led to a substantial 35% decrease in the volume of tomatoes arriving at markets from key growing regions, as reported by CRISIL. This reduction in supply has been a major driver of the price increase.
3. Heavy Rainfall and Infrastructure Damage: In addition to heatwaves, heavy rains in Himachal Pradesh have caused damage to roads and transportation infrastructure, further exacerbating the supply chain issues. The damaged roads have hindered the efficient movement of tomatoes from production areas to major consumption centers, contributing to the rise in prices, as reported by ET last week.
Current Price Trends and Historical Context
As of July 7, the average retail price of tomatoes stands at Rs 59.87 per kilogram, a significant jump from Rs 35 per kilogram just a month ago. This represents a dramatic increase of over 70% in a relatively short period. The price spike is not confined to local markets but is also evident on popular online grocery platforms like Amazon Fresh, Swiggy, and Zepto, where tomato prices are reaching Rs 80-90 in various parts of the country.
By July 5, the average price of tomatoes across India had risen to Rs 59.88 per kilogram, continuing an upward trajectory that began in May. The Centre for Economic Data and Analysis (CEDA) reports that in different regions, the price variations are as follows: North India sees prices around Rs 50 per kilogram, the North East region reports Rs 71 per kilogram, while the Western and Southern parts of the country experience prices of Rs 60.5 and Rs 60 per kilogram respectively.
Historically, vegetable prices tend to rise during the monsoon season due to the impact of rains on harvesting processes, including the picking and packaging of produce. Last year, similar adverse weather conditions led to tomato prices spiking to over Rs 350 per kilogram in some markets, illustrating the volatility of food prices.
Impact on Home-Cooked Meals and Inflation
The recent surge in tomato prices has had a noticeable effect on the cost of preparing home-cooked meals. According to a CRISIL report, the cost of making a typical vegetarian thali has increased by 10% in June due to sharp price increases in tomatoes, onions, and potatoes (TOP). Specifically, tomato prices have gone up by 30%, onion prices by 46%, and potato prices by 59% on an annual basis.
This escalation in vegetable prices is indicative of broader supply chain disruptions and adverse conditions affecting agricultural production. The rise in food prices has significant implications for the Consumer Price Index (CPI), which reflects the average change in prices paid by consumers for goods and services over time. Despite a drop in the overall inflation rate to 4.75% in May, the Reserve Bank of India (RBI) continues to face challenges in achieving its target inflation rate of 4% due to rising food prices.
RBI Governor Shaktikanta Das expressed concerns on June 7 about the potential for further inflationary pressures due to exceptionally high summer temperatures and low reservoir levels, which could continue to strain the production of vegetables and fruits.
Food Inflation Trends and Future Projections
Food inflation has been a persistent issue, with a year-on-year increase of 8.69% in May, a slight decrease from the 8.70% recorded in April. This elevated inflation rate for food has been a trend since November 2023, with wholesale inflation reaching a 15-month high due to rising prices of food articles.
In May, the inflation rate for vegetables soared to 32.42%, up from 23.60% the previous month. Onion inflation was reported at a staggering 58.05%, while the inflation rate for potatoes reached 64.05%. Additionally, pulses saw a notable inflation increase to 21.95% in May.
