Onion, potato and tomato prices skyrocket on lower output and extreme weather; households feel the heat

Prices of staple vegetables like onion, potato and tomato continue to be stubbornly high due to lower output last year, squeezing households.  

According to official data, the prices of onions and potatoes have remained high due to reduced output last year. Moreover, a hot and dry summer since April had strained supplies of many commonly consumed vegetables, shifting demand towards potato, onion and tomato.  

Retail prices followed suit with onions and potatoes seeing an upward trend, while tomatoes showed a monthly rise despite an annual decrease. 

According to market trends as of June 30, wholesale onion prices saw a 106 percent increase compared to the previous year. Similarly, wholesale potato prices also rose by 96 percent. Although wholesale tomato prices declined annually by 40 percent the prices have shot up sharply by 112.39 percent on monthly basis.  

Despite a slight moderation in June, tomato prices rose sharply from the previous month. The daily average retail price of tomato touched Rs 55 per kg on July 3 compared to Rs 35 a month ago, as per the price monitoring division of the consumer affairs ministry. 

Last year's irregular rainfall led to a 20 percent drop in onion output, and the poor monsoon further reduced the production of winter-sown onions by another 20 percent in 2024, the Hindustan Times reported.

High temperatures and falling reservoir levels since April have also affected seasonal vegetables like okra, gourds, beans, cabbage and turnips. According to traders, heatwaves have caused severe rotting of fresh vegetables, which has impacted prices.

In June, the Reserve Bank of India (RBI), in its monthly bulletin, noted that though consumer price index (CPI) headline inflation softened further during March-April, the exceptionally hot summer season and low reservoir levels may put stress on the summer crop of vegetables and fruits.  

The central bank noted the rabi arrivals of pulses and vegetables need to be carefully monitored. The severe heatwave’s impact may hinder the final stage of disinflation as the central bank aims to reach a 4 percent retail inflation target, disrupted by fluctuating high food prices. 

India's consumer inflation came in lower at 4.75 percent, but the concern was that food inflation continued to remain elevated at 8.69 percent, the Reserve Bank of India said in its Monetary Policy Committee (MPC) minutes released on June 26. Pulses and vegetables appear to be exerting most of the pressure on the food basket. Even the wholesale inflation in India came in at 2.61 percent, the highest level in the last one year, the central bank said.