Onion cheer & tomato tears

Onion prices in wholesale markets of Mumbai declined 48.6%, the steepest among the four metros, compared to October

In November, onions, which stoked inflation in recent months and probably played a part in the Congress party’s dismal performance in four Assembly elections, turned cheaper in four major cities — Mumbai, Delhi, Chennai and Kolkata — at both the wholesale and retail levels. However, the decline in wholesale prices was steeper.

While onion prices in the wholesale markets of Mumbai declined 48.6 per cent, the steepest among the four metros, compared to October, prices fell only 27.3 per cent in Mumbai’s retail markets. This was stated by Agriculture Minister Sharad Pawar in a written reply in the Lok Sabha on Tuesday.

Delhi, where Assembly elections were held recently, saw wholesale onion prices plunge 45.7 per cent, though retail rates declined only 20 per cent.

“The prices consumers get are artificial prices and aren’t totally governed by the demand and supply factors,” said Anis Chakravarty, senior director at Delloitte India.

Prices of tomatoes rose, both in the wholesale and retail markets. In November, the price of one kg of tomatoes in wholesale markets in Delhi was Rs 28 in November, 60 per cent less than the retail price of Rs 70. In October, the wholesale price was Rs 18 a kg, against the retail price of Rs 35 a kg.

“When you realise there is shortage of supply for any food item, the intermediaries take advantage and push the prices up. This is seen more at the retailer’s end,” said Madan Sabnavis, chief economist, CARE Ratings.

Some felt monitoring prices had become a hassle due to the involvement of intermediaries. “As a result of the long chain of middlemen, it becomes difficult to administer prices at all the levels and structural issues add up to that,” said Chakravarty.

For November, the Consumer Price Index (CPI) and Wholesale Price Index (WPI) data are to be released on Thursday and Monday, respectively. In October, WPI-based inflation stood at an eight-month high of seven per cent, against 6.5 per cent a month ago, primarily due to rising food prices. During the month, WPI-based food inflation stood at 18.2 per cent.

In October, CPI-based inflation stood at 10.1 per cent, against 9.8 per cent in the previous month. For retailers, the prices of food items rose 12.6 per cent, compared with 11.4 per cent in September.

Experts said for November, inflation for primary articles (those found in raw form) might fall. “The headline number will start coming down only from December; for November, it will, more or less, remain at the same level as in October,” said Sabnavis.