Vegetables upset household budgets in 2013

Pulses, edible oils and sugar proved saviours for consumers, with a steep fall in their prices despite an upsurge in WPI and CPI

Tomato, potato and onion were the three perishable commodities that disturbed the kitchen budget in 2013, with the highest inflation in both wholesale and retail markets.

Pulses, edible oils and sugar proved saviours for consumers, with a steep fall in their prices despite an upsurge in the Wholesale Price Index (WPI) and Consumer Price Index (CPI).

Data compiled by the Union ministry of food showed retail prices of tomato and onion jumped through the roof in the third quarter of the calendar year, hitting almost Rs 90 and Rs 100 a kg, respectively, in the national capital. Hoarding by middlemen, coupled with spoilage in godowns, created an artificial shortage of these vegetable additives. Aided by delay in sowing and harvesting of these crops, due to extended monsoon rainfall.

While the government made a huge attempt to bridge the shortage of onion through import from major producing countries, this was insufficient to control the price rise. The situation improved with arrivals of the new season's crop. Today, tomato, potato and onion are quoted in the Delhi retail market at Rs 30 a kg, Rs 20 a kg and Rs 28 a kg, still a rise of a staggering 114 per cent, 54 per cent and 27 per cent, respectively, in the past year. In wholesale markets, the price inflation in these commodities was sharper.

For 2014, the movement in prices of agri commodities would depend on the monsoon rainfall. "At the beginning of the year, one normally assumes the monsoon will be normal and kitchen commodity prices would remain largely stable. Given that oilseeds and pulses output have been stableand could even be marginally higher for FY14, one can assume the stocks will see us through till the end of the season i.e. October or so, and should keep prices range-bound," said Madan Sabnavis, chief economist, CARE Ratings.

Pulses remained under severe pressure this year, with a drastic decline in their prices due to the government's decision to allow import while continuing to suspend permission for export.

Consequently, the CPI stayed in double digits through the year, hitting 11.24 per cent in November because of costlier vegetables. WPI-based inflation rose to 7.52 per cent in November, the highest in 14 months. The Reserve Bank of India'c comfort level on inflation is capped at four-five per cent.

Sabnavis hopes that given the exceptionally high prices this year for almost three months, it would be reasonable to assume the kitchen commodities' price increases will be under control in 2014.