"FOOD PRICES SURGE AMID TOMATO, ONION, POTATO CRISES"

Why in the news?

Food costs hit an 11-month high in July due to surging tomato, onion, and potato prices, driven by crop issues and increased CPI food inflation.

source:medium

About Rising Food Costs:

Food costs reached an 11-month high in July for both vegetarians and non-vegetarians.
The average cost of a vegetarian meal rose by 11% from June to ₹32.6.
The cost of a non-vegetarian meal increased by 6% to ₹61.4, the highest since September.

Contributing Factors:

Tomato prices surged 55% month-on-month, reaching ₹66 per kg in July.
Onion prices increased by 20% and potato prices by 16% month-on-month.
Lower rabi output affected onion prices, while late blight infestation impacted potato crops in Punjab, Gujarat, and Uttar Pradesh.
Tomato crop was affected by whitefly infestation and high temperatures.

Year-on-Year Comparison

Despite the recent increase, tomato prices were 40% lower in July compared to July 2023.
Onion prices were 65% higher and potato prices 55% more expensive compared to last year.
Consumer Price Index (CPI) food inflation surged to 4% in June, the highest in six months, from 8.7% in the previous two months.

About Inflation:

Inflation is the overall increase in prices of goods and services, reducing purchasing power.
Rising inflation means higher prices without equivalent income rise, reducing buying capacity.
A continuous rise in inflation rate indicates accelerating price increases (e.g., 1% in March, 2% in April, 4% in May, 7% in June).

Causes of Inflation:

Demand-Pull Inflation: High demand surpasses supply, leading consumers to pay more.
Cost-Push Inflation: Increased production costs, such as raw materials and wages, drive prices up.
Wage-Price Inflation: A feedback loop where higher wages lead to higher prices, prompting further wage demands.

Government Initiatives to Control Food Inflation:

Subsidised Commodities: Increased distribution of subsidised vegetables like onions and tomatoes; release of wheat and sugar stocks.
Reduction in Import Duty: Incentives for pulse cultivation; reduced import duties on certain pulses.
Export Bans: Wheat exports banned since May 2022; broken rice exports banned since September 2022.
Ban on Stockpiling: Wheat stock limits for traders, millers, wholesalers, retail chains, and smaller retailers.
Operation Greens: Stabilises Tomato, Onion, and Potato (TOP) crop supplies year-round.
Floor Prices: Minimum export price of $800 per tonne on onions from October 29 to December 31, 2023.

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