Onion, Tomato Prices Climb Amid Damage From Excessive Rains
On an average, potatoes and onions were nearly 50% expensive in September so far compared to last year.
Prices of key vegetables, such as onions and tomatoes, climbed in September, as several parts of the country saw crop damages amid excessive rains.
On an average, potatoes and onions were nearly 50% expensive in September so far, compared to an year ago, while tomatoes cost about 14% more, according to high frequency data from the Department of Consumer Affairs. On a sequential basis, onion prices rose by 11% in September so far, climbing to over Rs 50 per kg.
We have mainly seen rise in price of onions and tomatoes in September versus August, said Garima Kapoor, economist at Elara Securities India Pvt. As export duty on onions was lifted, prices rose, necessitating sale by government from price stabilisation fund, she said.
With respect to tomatoes, excessive rainfall in key tomato growing states like Telangana, Andhra Pradesh, Maharashtra and Gujarat have limited farm activities and led to crop damages.
Madhavi Arora, lead economist at Emkay Institutional Equities, also said that food prices, especially of vegetables, have moved higher after heavy rainfall and flooding over the last week, that disrupted supply.
The impact of higher customs duty on imported edible oils is also seen reflected in retail prices now (which rose 2.6% on a sequential basis), Arora said.
This doesn't augur well for inflation as RBI recently noted a decline in veggie prices in September, compared to August, Kapoor cautioned.
With overall sowing nearly complete, focus will now shift toward harvesting season, with higher-than-normal rains likely to cause crop damage and thus pose upside risk to food inflation, Arora said.
Cumulative rainfall as on Sept. 18 was 7% above the long-term average for the season. While, weekly rainfall was 7% below the long-term average. However, spatial divergence has continued, with Northwest India, Central India, and the Southern Peninsula all having seen excessive rainfall for the season.
Total area under sowing currently stands at 1,096.7 lakh hectares, as on Sept. 17, 2% higher than the same period an year ago, according to an update by the ministry of agriculture. This was mainly due to higher sowing for most major food crops, including rice, pulses, coarse cereals and oilseeds. Among non-food crops, lower cotton sowing is a concern.
