Why are tomatoes, onions, and potatoes expensive now? Decoding CPI inflation in India- The Week

If you imagine your grocery list is eating into your finances, you are right. Vegetable inflation spiked to 37 per cent in July 2023 (tomatoes) and 42 per cent in October 2024 (potatoes). Overall food inflation hit 11.5 per cent in July 2023.

The Reserve Bank of India shows rainfall changes raise vegetable inflation by 1.24 percentage points, while temperature changes increase it by 1.30 points.

Tomatoes were hit by massive 2023 rains that cut Himachal Pradesh and Karnataka production by up to 13 per cent, pushing Delhi mandi prices from Rs 18/kg in June to Rs 67/kg in July. Onions have been impacted by unseasonal rain and hailstorms in Maharashtra that caused a 28.5 per cent production drop in 2023. In the case of potatoes, frost and rainfall shocks in Uttar Pradesh and West Bengal cut production by 7 per cent in 2023-24, keeping prices high throughout 2024.

The worst hit? Small farmers who dominate the vegetable supply face mounting losses without adequate storage, insurance, or climate adaptation support.

A study by the Reserve Bank of India, analysed by Climate Trends, shows that temperature fluctuations tend to affect prices more rapidly than rainfall changes. This is particularly evident in short-duration, perishable crops such as tomatoes, onions, and potatoes, which are major drivers of price spikes in India’s vegetable markets.

India’s food prices, particularly for key vegetables like tomatoes, onions, and potatoes (TOP), have experienced significant volatility in recent years due to extreme weather events intensified by climate change. These perishable crops are highly sensitive to variations in rainfall and temperature, which disrupt supply, damage crops, and cause sharp price fluctuations. This volatility has translated into substantial contributions to food and headline inflation in India, affecting both consumers and smallholder farmers who dominate vegetable production.

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India’s Consumer Price Index (CPI) is highly sensitive to food price shocks, with food and beverages constituting 45.9 per cent of the index. TOP vegetables contribute disproportionately to inflation despite their relatively small weight in the index (2.2 per cent overall), owing to their vulnerability to weather and supply disruptions. Price spikes in these commodities tend to ripple through the food system, amplifying inflationary pressures.

Since 2019, India has faced several significant climate-induced disruptions that have driven up vegetable prices, including unseasonal rains, hailstorms, and heatwaves.

The year 2024 was recorded as the hottest on record, amplifying heatwaves and uneven rainfall patterns that further stressed vegetable production. Consumer food price inflation peaked at 11.5 per cent in July 2023 and 10.87 per cent in October 2024. Vegetable inflation reached a dramatic high of 42 per cent in October 2024, primarily driven by potato shortages.

India’s TOP vegetable production is geographically concentrated, making prices highly susceptible to local weather extremes.

For example:

– The top two potato-producing states, Uttar Pradesh and West Bengal, account for nearly half the national output.

– Maharashtra and Madhya Pradesh are major onion-producing states.

– Tomatoes are more evenly distributed across states such as Madhya Pradesh, Andhra Pradesh, and Maharashtra, but are still vulnerable to localised climate events.

Most vegetable production in India is carried out by small and marginal farmers who lack adequate safeguards against extreme weather. These farmers face disproportionate losses due to limited access to storage, transport, and financial protection.

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Extreme weather impacts extend beyond crop yields to transportation and storage. Heavy rains damage standing crops and lead to high moisture content during transport, causing vegetables to rot before reaching markets. In Azadpur Mandi, wholesalers reported lower vegetable supply and poorer quality produce during periods of heavy rainfall and heat. This reduced availability further fuels price spikes.

The repeated crop losses and supply shocks have kept inflation rates unusually high across multiple years. Food inflation, which had eased after 2014 due to improved supply chains, saw sharp spikes starting in 2019-20 and endured volatility through the COVID-19 pandemic and global supply disruptions. Inflationary pressures intensified again in 2023-24 with recurrent extreme weather events.

Prices at Azadpur Mandi illustrate this trend: tomato prices rose from Rs 18/kg in June 2023 to over Rs 67/kg in July; onion prices reached Rs 39/kg in November 2023; and potato prices averaged Rs 21.6/kg in August 2024, significantly above the typical Rs 10-14/kg range in prior years.

A combination of technological, infrastructural, and policy interventions is required to remedy this situation. These include:

– Promoting climate-resilient crop varieties and protected cultivation methods such as greenhouses for sensitive crops like tomatoes.

– Strengthening supply chains by expanding cold storage facilities, refrigerated transport, and warehousing to reduce post-harvest losses.

– Developing weather-informed price forecasting systems and timely advisories to assist farmers in adjusting planting and harvest schedules.

– Expanding social protection mechanisms like index-linked crop insurance and nutrition safety nets to support vulnerable farmers and households.

– Encouraging cluster farming and collective marketing to improve economies of scale, reduce spoilage, and provide better market access.

– Improving horticulture data and market intelligence to help farmers align sowing decisions with demand and avoid market glut.

Dr. Ashutosh Singh, Professor at G.B. Pant University of Agriculture and Technology, highlights the disproportionate impact on small farmers, noting that adaptation costs are higher for them and forward supply chain improvements are crucial. Immediate post-harvest transport and pooling produce for refrigerated transport are cost-effective strategies for these farmers.

India’s experience with extreme weather shocks underscores the intertwined challenges of climate change, agriculture, and food security. The volatility in prices of tomatoes, onions, and potatoes, driven by erratic rain and temperature fluctuations, poses risks not only to inflation but also to the livelihoods of millions of smallholder farmers.

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