The prices of onion and potato, two essential grocery items in India, continue to surge, putting a strain on households as lower output from last year impacts the market. Official data reveals that while tomato rates showed a slight moderation in June compared to the previous year, they were still significantly higher than the previous month.
Officials are banking on a strong kharif or summer planting season to help alleviate food inflation. The hope is that increased summer sowing will have a positive impact on market sentiment, leading to a decrease in prices.
The hot and dry summer weather since April has led to a scarcity of many commonly consumed vegetables, pushing up demand for potato, onion, and tomato, thereby increasing their prices. Wholesale onion rates have seen a staggering 106% increase year-on-year, while potato prices have jumped by 96%.
Similarly, wholesale tomato prices witnessed a 40% decline annually in June, but surged by 112.39% month-on-month, highlighting the market’s volatility. These three vegetables collectively account for 44% of a household’s monthly spending on vegetables in India.
Retail prices have also soared, with onion modal rates rising by 81% compared to a year ago, and potatoes up by 57%. Tomatoes, on the other hand, saw a 71% increase from the previous month. Last year’s poor monsoon resulted in a drop in onion production, further exacerbated by a 20% decrease in rabi onion output in 2024.
The government had to intervene last year by selling subsidized onions due to a drastic price surge. Additionally, the ban on onion exports was lifted in May with a 40% duty. The impact of blistering temperatures and diminishing reservoir levels has affected the output of seasonal vegetables like okra, gourds, beans, and cabbage.
In the current scenario, prices of onions and potatoes in Mumbai have doubled compared to the previous year, while tomato prices have seen a nearly 60% increase. With ongoing challenges in vegetable production, it is imperative for authorities to monitor the situation closely and implement measures to stabilize prices.
