Costly vegetable prices push up retail inflation; CPI hits three-month high

Centre to procure tomatoes from Andhra, Karnataka and Maharashtra, sell at discounted prices at co-op outlets
Vegetables on sale at Azadpur Mandi, in New Delhi, Wednesday, July 12, 2023. (Photo | PTI)
Vegetables on sale at Azadpur Mandi, in New Delhi, Wednesday, July 12, 2023. (Photo | PTI)

NEW DELHI: WITH vegetable prices soaring, retail inflation as measured by the Consumer Price Index (CPI) rose to a three-month high of 4.81 per cent in June, up from 4.31 per cent in May and 4.7 per cent in April. 

According to government data released on Wednesday, the Consumer Food Price Index, which measures changes in the retail prices of food items, rose to 4.49 per cent in June from 2.96 per cent in May on account of high inflation in vegetables, pulses, meat and fish.

The data showed that vegetable inflation in June 2023 grew 12.2 per cent over May, even though year-on-year prices saw a decline of 1 per cent.  Egg prices grew 5.5 per cent in June while the rates of meat and fish rose 3.8 per cent.

“Vegetables are some of the highly volatile components in India’s CPI basket. Within that, prices of onion, garlic, tomato, potato, and ginger are the most unstable. Historical data suggest that price spikes in onion and ginger are not conditional upon seasonality and can occur all year round, however, that of tomato and potato are seasonal and usually spike during the summer-monsoon months of June-September,” says Debopam Chaudhuri, chief economist, Piramal Enterprises.

To address the tomato problem, the Centre has decided to procure them from producing states and sell them at discounted prices in major cities from Friday.

The Department of Consumer Affairs has directed the National Agricultural Cooperative Marketing Federation and the National Cooperative Consumers Federation to procure the kitchen staple from Andhra Pradesh, Karnataka and Maharashtra for distribution in major consumption centres, where the retail prices have gone through the roof. 

As tomato prices shot up to absurd levels, people have drastically cut down on its consumption, says a survey by community social media platform LocalCircles. As much as 75 per cent of households chose to cut consumption while 7 per cent have completely stopped buying tomatoes, notes the survey based on data from 311 districts. 

IIP grows 5.2 per cent in May

India’s industrial production grew 5.2 per cent in May, which is significantly lower than the year-ago growth of 19.7 per cent but more than April’s 4.2 per cent. While the manufacturing sector’s output grew 5.7 per cent, the mining sector expanded by 6.4 per cent.

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The New Indian Express