According to farmers and dealers, irregular monsoon rains delayed planting and harmed maturing crops, so vegetable prices in India are expected to remain higher for longer.
According to official statistics, vegetable prices in June rose 12% month over month, reaching a seven-month high given their 6% weighting in the overall consumer price index (CPI).
Normally, prices start to decline in August as the crop enters the market, but this year, merchants anticipate that prices would stay high until October due to the continued shortage of supply.
“The vegetable supply chain is being disrupted by the rain. According to Mumbai-based merchant Anil Patil, this year will see persistently rising vegetable costs.
As state elections approach in the coming months, more expensive commodities like onions, beans, carrots, ginger, chilies, and tomatoes not only fuel voter resentment: The possibility for the Reserve Ban will be lessened since the increased prices are likely to fuel retail inflation, which is anticipated to reach a seven-month high in July.
As state elections approach in the coming months, more expensive commodities like onions, beans, carrots, ginger, chilies, and tomatoes not only fuel voter resentment: The ability of the Reserve Bank of India (RBI) to drop rates this year will be reduced as a result of the increased costs, which are anticipated to fuel retail inflation, which is predicted to reach a seven-month high in July.
“The most effective way to keep the rise in food prices in check would be supply-side initiatives. Gaura Sen Gupta, an economist with IDFC FIRST Bank who specializes in India, predicts that the RBI will remain on hold until at least December 2023.
In the past three months, wholesale tomato prices have increased by more than 1,400% to a record 140 rupees ($1.71) per kg, forcing many businesses and homes to reduce their purchases.
Poor rainfall, higher temperatures, and a virus epidemic, according to farmers in the third-largest tomato-producing area in the southern state of Karnataka, have hurt the harvest, which was grown on less acreage than usual due to a price drop a year ago.
According to a recent note from HSBC economists, supply interruptions and the ensuing rise in food prices are predicted to push retail inflation up to 6.5% in July, its highest level this year and over the Reserve Bank of India‘s 2% to 6% target range. Now, economists anticipate the RBI to maintain high-interest rates through the middle of 2024.
Crops planted in June should begin to produce more in the coming weeks, but it won’t be enough to lower costs.