Slide in tomato prices aid an 8% dip in vegetarian meal costs, CRISIL says

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| Photo Credit: K.R. Deepak

A sharp 51% drop in tomato prices aided in an 8% decline in average vegetarian meal costs through August but onion and potato prices surged more than 50% and the actual price paid by consumers for a vegetarian plate of food remained the second highest over the past year at ₹31.2, just 4% below July levels, as per Crisil’s monthly food plate cost tracker.

Economists expect India’s retail inflation to stay below the the Reserve Bank of India’s 4% inflation target for the second month in a row, with base effects coming into play again. Consumer price inflation had dipped to a five-year low of 3.5% in July, with food inflation at a 13-month low of 5.4%. In August 2023, retail prices had surged 6.8% with food inflation exceeding 9.9%.

“High frequency data for perishables point to a moderation in momentum into August, which together with remnant base effects are likely to keep headline inflation in the lower half of the target band at 3.2%,” said Radhika Rao, executive director and senior economist at DBS Bank.

Bank of Baroda’s monthly Essential Commodity Index, that gauges price trends, rose 3.1% in August, compared with 5% in July, and declined 1% on a sequential basis following a 2.1% month-on-month uptick in the previous month. “This is led by a correction in prices of vegetables, especially tomato, while other essential commodities also moderated sequentially, so we expect inflation as per the Consumer Price Index (CPI) to print at 4% in August,” said Aditi Gupta, an economist at the bank.

Nomura economists expect food price inflation to average about 4.5% between August and March 2025, from 8.3% so far this year. 

“We expect headline inflation to ease further to around 3% in August, and average 3.6% in the third quarter of 2024-25, below the RBI’s forecast of 4.4%,” they wrote in a note.

While tomato prices may remain benign, Pushan Sharma, research director at Crisil Market Intelligence and Analytics cautioned that potato prices were likely to remain firm owing to late blight infestations in some key States, while onion prices could rise further in the near term. Ms. Gupta also flagged that unseasonal and excess rainfall in parts of the country remained a key risk.