Veggie prices dip thanks to higher yield, could help mellow inflation

A businessline analysis of 14 seasonal vegetable prices at agricultural market yards (mandis) showed that all-India daily average prices have dropped 1-71 per cent on January 3 from year-ago levels in the case of radish, coriander, cauliflower, brinjal, pumpkin, tomato, bottle gourd, okra, carrot and cabbage. However, there is an increase in the price of capsicum (by 6.3 per cent), onion (by 18.3 per cent), cucumber (by 78.7 per cent) and potato (by 85 per cent) during this period.

On the other hand, retail prices of all essential vegetables – onion, potato and tomato – are higher than a year-ago, though the rise is minimal in the case of onion (by Rs 1.44/kg) and tomato (by Rs 2.71/kg). But all-India average retail price of potato was Rs 10.36/kg higher on January 3 compared to a year ago.

Primary food inflation moderated to 8.63 per cent in November 2024 compared to 13.54 per cent in October 2024, helping the wholesale price index (WPI)-based inflation to drop to a three-month low of 1.89 per cent in November 2024 from 2.4 per cent recorded in October 2024. In the food basket, vegetable inflation mellowed the most (28.6 per cent in November 2024 versus 63 per cent on October 24), as rates of onion, tomato, radish, cucumber and beans among others dipped.  Anil K Sood, Professor and Co-Founder of the Institute for Advanced Studies in Complex Choices, said: “If we exclude the vegetable price inflation for 2019 and 2024, it is in negative during these months since 2014. In fact, the monthly average vegetable price inflation of 26.9 per cent this year is the highest in a decade.” Sood expects December and January vegetable price inflation too to be at a higher level, resulting in headline inflation being higher as well.

Pointing out that the average vegetable price inflation was 17 per cent even during the pandemic year 2020, he said high vegetable prices during the winter months is an unusual and recent phenomenon

There has been moderation in vegetable inflation, especially in tomatoes whose prices have increased at the lowest pace in two months, said Paras Jasrai, Senior Analyst, India Ratings & Research. Onion prices continued to decline for the second successive month in December 2024. But Potato prices have increased at the sharpest pace of 51.9 per cent (y-o-y). “The retail inflation may move down closer to 5 per cent mark in December 2024 and if the trend sustains, then retail inflation could be between 4.5-5 per cent in January 2025,” Jasrai said.