CRISIL Limited, formerly Credit Rating Information Services of India Limited, is an Indian analytical company providing ratings, research, and risk and policy advisory services. According to a recent report by Crisil Extreme weather events have resulted in frequent fluctuations in vegetable prices in India. The report highlights a significant rise in vegetable prices, ranging from a low of -7.9% in May 2023 to a peak of 37.4% in July 2023, contributing to approximately 30% of food inflation in the fiscal year 2024.
The escalating impact of extreme weather conditions in India is not only affecting electricity bills but also driving up vegetable prices, which have been a prominent factor in retail inflation for an extended period. Crisil emphasizes that the increasing frequency and severity of weather disruptions have intensified the volatility in vegetable prices in recent times, necessitating measures to mitigate these effects on vegetable production and pricing.
Vegetables accounted for around 30% of food inflation in the fiscal year 2024, surpassing their 15.5% share in the food index. While the price surges of tomatoes and onions garnered significant attention, other vegetables such as garlic, ginger, brinjal, parwal, and beans also experienced substantial inflation rates. Garlic and ginger, for instance, saw inflation rates of 117.8% and 110.4%, respectively.
The report, issued on 24th April 2024, highlights anomalies in the fiscal year 2024 that contributed to elevated inflation levels. Factors such as warmer weather, irregular rainfall patterns, and pest infestations disrupted the typical seasonal trends, resulting in heightened vegetable inflation for the year.
Vegetables hold a weightage of 6.04% in the consumer price index-based inflation basket, making them the third most significant component in the food and beverages sub-group, following cereals and milk. The food and beverages sub-group carries the highest weight in CPI inflation at 45.86%.
In March 2024, CPI inflation was recorded at 4.85%, with vegetable inflation standing at 23.84%, consequently propelling inflation in the food and beverages category to 7.68%.
Additionally, the Reserve Bank of India’s monthly bulletin highlighted the potential risk of inflation from extreme weather events and geopolitical tensions affecting crude oil prices. The World Meteorological Organization’s report also raised concerns about global warming, indicating a high likelihood of 2024 surpassing the record set in 2023 as the hottest year globally, amidst growing freshwater scarcity challenges. Data from the Indian Meteorological Department underscores the increasing frequency of extreme weather events, emphasizing the urgent need for a collective response to address these challenges.
