Food prices in August: Veg thali costs drop by 8%, non-veg thali price decline by 13% 

The cost of homecooked vegetarian thali showed a significant decline in the month August after prices for key ingredients, such as tomatoes, vegetable oil, and spices, reduced as compared to previous months this year. According to Crisil’s Roti Rice Rate index, the price of vegetarian (veg) thalis dropped by 8 per cent year-on-year (Y-o-Y), while non-vegetarian (non-veg) thalis saw an even sharper decline of 12 per cent Y-o-Y.

> According to CRISIL MI&A Research estimates, on-year, prices of tomato, which accounted for ~14% of the veg thali cost in August, declined 51% on-year (from Rs 102 per kg in August 2023 to Rs 50 per kg in August 2024) due to fresh arrivals from southern and western states.

> A 27% drop in fuel cost – to Rs 803 for a 14.2 kg LPG cylinder in Delhi in March 2024 from Rs 1,103 in August 2023 – contributed to the decline.

> Prices of vegetable oil, chilli and cumin, which together account for less than 5% of the veg thali cost, eased 6%, 30% and 58% on-year, respectively.

> The decline in cost was sharper for a non-veg thali due to an estimated 13% on-year drop in prices of broiler, which account for ~50% of the cost.

> That said, an on-year uptick of Rs 15 per kg and Rs 13 per kg in onion and potato retail prices, respectively, due to lower rabi arrivals capped the decline in costs of both veg and non-veg thalis.

Monthly figures

On a monthly basis from July to August 2024, the costs for both the veg and non-veg thalis decreased. The veg thali saw a decline of 4 per cent, while the non-veg thali declined by 3 per cent. This reduction in costs was mainly due to a significant drop in tomato prices, which fell by 23 per cent, from Rs 66 per kilogram in July to Rs 50 per kilogram in August.

In addition to the decrease in tomato prices, the cost of the non-veg thali was also influenced by a 1-3 per cent decrease in broiler prices, a common occurrence during the Shravan month. During this time, non-veg consumption tends to decrease nationwide due to religious observances.

Despite these declines, there was a 2 per cent increase in potato prices and a 3 per cent increase in onion prices on a monthly basis. These increases limited the potential for a more substantial decrease in thali costs.

The decrease in expenses comes as a relief for households across India, particularly amidst concerns about food inflation.

Food inflation

India, of late, has seen a positive trend in food inflation as a result of good harvests following monsoon rains, which have replenished water levels in reservoirs, as highlighted in a recent government report. The finance ministry's monthly economic report noted that the steady progress of the southwest monsoon has provided crucial support to summer sown crops.

The inflation landscape in India reflects these improvements, with retail inflation dropping to a near five-year low of 3.54% in July. This decline can be attributed significantly to a base effect, as food prices have alleviated from their previous highs. Notably, food inflation, which makes up a substantial portion of retail inflation, decreased to 5.42% in July from 9.36% in June.

These developments indicate a positive outlook for India's inflation scenario moving forward, with the anticipation of further improvements in the coming months.

On Thursday, RBI Governor Shaktikanta Das said the pace of disinflation is frequently interrupted by volatile and elevated food inflation. 

He said with the monsoon progressing well and the healthy kharif sowing raising prospects of better harvest, food inflation outlook could become more favourable over the course of the year. “We have to remain watchful of how the forces impacting inflation play out,” he said.