Few Indians are giving up on tomatoes despite red hot prices, subsidies aren’t helping much, shows survey

• Only 15% of respondents to a LocalCircles survey say that they stopped buying tomatoes lately.
• Around 12% said that they paid over ₹200 per kilo, with subsidised tomatoes aiding only 7% of the respondents.
• Economists are worried about rising prices of other vegetables too as higher tomato-potato-onion prices have changed inflation projections.
  

These days, buying a kilogram of tomatoes will take up the weekly vegetable budgets of most middle-class families. While tomato prices have gone as high as ₹200/kilogram in North India, the rest of the country too has been shelling out as much as ₹150/kilogram. What’s worse is that there are no major signs of prices cooling off with other vegetables and grains likely to join the high-price party due to incessant rains.

However, such is the demand for the red ‘fruit’ that’s ubiquitous in every third Indian dish, that households haven’t abandoned it despite the high prices.

In a survey conducted by LocalCircles, only a small percentage of respondents said that they stopped buying tomatoes.

“An overwhelming 85% out of 10,985 respondents stated that they did purchase tomatoes in the last week, while 15% indicated that they have stopped purchasing tomatoes lately, suggesting that the prevailing market prices are still unaffordable for many households,” said LocalCircles.

Many state governments are bringing subsidised tomatoes into the market but this hasn’t translated to lower prices for many. This is because even as the prices are cooling in the wholesale markets (down 30% from the peak), they are yet to make an impact at the retail level. Only 7% of the respondents said they’ve benefitted as prices have come down to ₹80-90 per kilogram.

The rest of the respondents say that they’ve bought tomatoes at around ₹150 or above. About 45% indicated that they last paid ₹100-150/kilogram; 25% of households surveyed paid ₹150-200. About 7% paid around ₹200-250/kilogram, and 5% paid over ₹250/kilogram – indicating that a lot of people are shelling out moolah in spite of sky-high prices.

“If the government wants prices for consumers to stay low, it may have to expand its subsidised tomato sales programme to many more cities and districts and even evaluate import of tomatoes till the supply situation normalises,” LocalCircles says.

It’s raining inflation

For the month of June, India’s retail inflation hit a three-month high at 4.8%. Going forward too, economists believe the prices of most commodities, especially fruits and vegetables, are expected to be high as incessant rains have been battering North India.

Madan Sabnavis, the chief economist at Bank of Baroda believes that rains and landslides can add 0.2% to headline inflation.

Adding to the shocking 64% inflation in tomato prices, the prices of other vegetables like onion and potato also rose month-on-month in June — onion by 8.1% and potato by 10.5%.

These three vegetables can have a profound impact on food inflation, believes SBI Ecowrap.

“We believe if tomato price increase without any substantial change in potato and onion then average inflation in Q2 FY24 will come near 5.8% yoy but if the TOP (tomato, onion, potato) inflation increases, then CPI might come around 6% yoy in Q2 FY24,” said the research firm.