Tomatoes highly perishable, price spike short-lived: RBI bulletin

Tomato prices recently experienced a sudden increase due to unfavorable weather conditions and pest attacks in major production areas, according to the Reserve Bank of India's July edition of monthly bulletin. However, the bulletin assures that these price spikes are short-lived, as tomatoes are highly perishable and have a brief crop duration, leading to significant seasonal price variations.

The RBI's report reveals that tomato prices tend to stay above Rs 40 for about 39 days (2.6 fortnights) on average, while remaining below Rs 20 for approximately 150 days (10 fortnights). This suggests that the fluctuations are temporary and not a constant upward trend.

Additionally, the bulletin highlighted that studies indicate that changes in wholesale prices have a relatively minor impact on the difference between wholesale and retail prices. For instance, even if wholesale prices rise by 1 percent, the difference in retail prices increases by only 0.1 percent. This mechanism helps absorb sudden shocks and ensures that inflation in retail prices remains relatively stable.

However, there are concerns about the spillover effect of tomato price increases on other commodities, as well as the growing intensity of price fluctuations over the years. To address these issues, it is essential to improve the supply chain, facilitating better control over inflation and ensuring more stable prices for consumers, the bulletin said.