Tomato is not the villain of the rise in retail inflation in June

The kitchen staple may, however, be responsible for its expected spike in July

Contrary to popular perception, tomatoes did not fuel the retail price inflation in June. Rather, this kitchen staple continued to witness deflation, though the rate of price fall decelerated in June compared to May 2023.

Tomato witnessed deflation (price fall) of 34.73 per cent in June compared to 52.80 per cent in May.

In fact, June was the eighth month in a row when tomatoes saw deflation. It was instead in June 2022 that inflation in tomatoes was as high as 158.43 per cent.

Given that tomato prices have surged in the recent past, the obvious question is: How is it that tomatoes recorded a price fall in official statistics when it remained unaffordable for the common person in June.

That is because inflation is calculated year on year (y-o-y) , while the common person looks at prices on a daily or monthly basis.

As such, when one looks at the consumer price index (CPI) for tomatoes on a monthly basis, there is a 64.46 per cent jump in June compared to May this year. The index rose to 191.1 points in June against 116.2 points in May. In fact, the index was the highest in eight months.

However, if one looks at y-o-y movement, the index was down 34.73 per cent in June since it was 292.8 points in the June of 2022.

If one looks at absolute prices, the average retail price of tomatoes stood at Rs 32.58 a kg in five zones, including Northeast India, in June this year compared to Rs 52.03 in the same month of 2022, showed data by the Department of Consumer Affairs. This represented a 37.38 per cent fall, almost the same as the rate of deflation in official statistics of CPI numbers.  

Experts said the official statistics of CPI did not capture a full month because of which it may not have reflected the surge in tomato prices in late June. Former chief statistician Pronab Sen said a survey for CPI is typically carried out in the middle two weeks of the month concerned.

Debopam Chaudhuri, chief economist at Piramal Enterprises, said the government statistics come with a lag and hence the spurt in prices of tomatoes in late June and July so far would be captured in the data for July which would be released the next month.

He said tomato prices typically climb from June and starts coming down only towards late August. However, the tomato inflation remains high till September generally because of delay in government statistics to capture these numbers.   

“As such, I believe that inflation in tomatoes would be high from July to September if the government does not take measures to limit their prices,” Chaudhuri said.  

The average retail price of tomato in July (till the 12th) stood at Rs 91.73 a kg in five zones compared to Rs 39.44 in the entire month of the previous year, according to data by the Department of Consumer Affairs.

Tomato’s other two companions, onion and potato, popularly known as ‘TOP’ vegetables, also did not witness much price pressure insofar as y-o-y CPI inflation rate was concerned. Potatoes saw a slightly lower deflation rate of 13.87 per cent in June compared to 14.37 per cent in May, while onions witnessed an inflation rate of 1.65 per cent against a deflation rate of 5.48 per cent in this period.

Snapping the four-month declining spree, the CPI inflation rate rose to a three-month high of 4.81 per cent y-o-y in June as against 4.31 per cent in the previous month. Food inflation rose sharply to a three-month high of 4.49 per cent from 2.96 per cent over this period.  

Tomato has 0.57 per cent weight in the CPI and, hence, only a big spike in its inflation rate will cause any discernible movement in the overall rate of price rise.