As the festival season approaches, Indians are headed towards a food inflation hurricane. As per the all India Consumer Price Index (CPI), annual retail inflation increased to 5.49% in September, much higher than the August figure of 3.65%. This is the highest retail inflation rate since December 2023, when it was 5.69%. Fuelling this rise is the unchecked problem of food inflation.
Food inflation rose 9.24% annually compared to a 5.66% rise in August. But these are the September figures. With the pending kharif harvests and rabi vegetables sowing in North India, tomato prices have started to rise exponentially again. In Delhi-NCR, tomato prices are now touching Rs 80-Rs 100 a kilo Whereas online retailers Country Delight are selling 900 grams of tomatoes for Rs 110 on a marked discount. The original listed price was Rs 220/900 grams.
Taking a look at the wholesale price, the Gurgaon agricultural produce market committee (APMC) saw tomatoes reach Rs 6,655/ quintal, whereas further north in Narwal, J&K tomatoes reached Rs 6,800 quintal. At Odisha’s Gunnupur APMC, tomatoes touched Rs 6,500 on October 14. Overall, tomato prices are seeing an upward trend through the country.
In Allahabad, the retail prices of the vegetable – a staple of Indian cooking – was around Rs 100/kg. Even the rural Allahabad trans-Yamuna region saw tomatoes reach Rs 80.
When we look at other staples in the Allahabad region, potato prices reached Rs 40 compared to an average of 20-25/kg while onions are selling at Rs 60 compared to an average of Rs 25-30/kg.
Going westwards, the Jaipur and Muhana APMC traded onions for a maximum price of Rs 4500/quintal, while the Gurgaon APMC had them at Rs 4,522 and Odisha’s Rahama saw prices reach Rs 4,000/quintal.
This supply lull is also part of the seasonal pattern, but nevertheless the spike is sharp and quite unusual. Each year, Indian markets have been trained to cushion inflationary shocks, but market volatility during the past couple of years has broken through the market resilience.
Why is this so? Hasn’t the government been watching the inflationary spikes? The answer is yes. But unfortunately the government has been ineffective in curbing food inflation. Reportedly, between June 2020 to June 2024, RBI figures indicate food inflation stood at an average of 6.3%.
Everyday food items like vegetables experienced about 10% inflation for over 22 months, pulses for 24 months, eggs for 15 months and meat and fish for 10 months. Even in Modi’s first term in 2015, dal prices touched Rs 200, yet the Modi government remained silent and let the country take the inflationary blow. Further, it moved to dismantle the laws that protected citizens against hoarding and market manipulation.
When we speak of staples like cereals, in the period between June 2020 to June 2024, cereals on an average experienced a near 10% inflation for nearly 15 months. Wheat prices until early this year were also very high. Consumers were paying up to 25% more for their roti. Of course, wheat prices were first rocked by the Ukraine-Russia conflict and then a series of bad harvests in the wheat belts. Complimenting our disaster tray was government mismanagement of food grain reserves and random export-import bans. All these factors led to wheat price volatility.
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The other major cereal, rice, had a similar story, with bad harvests in kharif due to adverse weather events and drought like conditions in August and October last year, adding up with flip-flop on rice export policies. These export bans caused a global shortage, harming medium traders and exporters throughout the country. Meanwhile consumers had to pay more for every morsel of rice.
Are farmers reaping the benefits of this prices rise and inflation? The straight answer is no. Let us take the case of tomatoes again. Farmers were getting as low a prise as Rs 3-5/kg for their tomatoes. Meanwhile tomato prices had touched Rs 200 in 2023. Other tomato growing belts experienced similar distress. One tomato farmer in Karnataka reportedly committed suicide due to low rates for tomatoes in 2023.
Meanwhile a paper by the RBI points to the great disparity in agriculture, where vegetable and fruit farmers get only 1/3 of the retail price, while dairy farmers get about 70% and meat and poultry farmers get 56% of retail prices. It was also said that tomato farmers get about 33%, potatoes farmers get 37%, whereas onion farmers get 33.5%. But this paper has been criticised for not being reflective of the true plight of the farmers. Questions have also been raised about the samples used to make the conclusions. Indeed, when we cross reference this data with rural consumption and farm incomes even in the potato, onion and tomato belts, we find an inconsistency. If this paper was 100% accurate, we would observably see better economic conditions, more rural consumption and higher mean farm incomes in these regions.
To conclude, flagship programmes to curb TOPs (Tomato, Onion, Potato etc) inflation, along with other agrarian and food policy have again been tested to reduce inflation, and perhaps failed. The direct impact of failed policies and food inflation is suffered most by the underprivileged. Malnutrition is rising each year, and its not only the Hunger Index that tells this tale. Urban and rural malnutrition has increased in the past four years, and the signs are clear on the faces of malnourished children. One only has to look beyond the veneer to see them.
Indra Shekhar Singh is an independent agri-policy analyst and writer. He was the former director for policy and outreach at NSAI. He also hosts The Wire’s agriculture talk show, Krishi ki Baat/Farm Talks. He posts on X @indrassingh.
This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.
