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The Impact of Tomato, Onion, and Potato on Inflation in India

by Devendra Kumar
May 23, 2024
in Market, News, Onion, Tomato
0
The Impact of Tomato, Onion, and Potato on Inflation in India

The significance of tomato, onion, and potato (TOP) in influencing inflation trends underscores the necessity for strategic policy interventions and a comprehensive understanding of agricultural supply chains.

In India, inflation serves as a crucial indicator of economic well-being, reflecting changes in the general price level and cost of living. The Consumer Price Index (CPI) is utilized to gauge price inflation, with vegetables accounting for a notable 6.04% weight in the total basket of 299 items. Among vegetables, TOP carries a weightage of 2.2% in the overall CPI basket for an average Indian household, playing a pivotal role in shaping food and beverages inflation as well as headline CPI figures.

The year FY2023-24 witnessed a significant 15% surge in vegetable prices in India, with prices fluctuating notably month-to-month. Despite vegetables constituting only 6% of the CPI basket, their impact on inflation peaked at approximately 30% in February and March 2024. Tomato prices, in particular, skyrocketed by 202% in July 2023, contributing significantly to headline inflation despite their minimal weightage in the CPI basket.

The volatility and prominence of TOP in driving inflation underscore the importance of targeted policy measures and a deeper comprehension of agricultural dynamics. Given the perishable nature of these crops and the challenges posed by various stresses, enhancing agricultural value chains and cold storage facilities, ensuring fair prices for farmers, and addressing input cost disparities are crucial steps to mitigate inflation volatility and support farmers in the cultivation of these essential crops.

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