16% household consumers surveyed cutting consumption or feeling the pinch of rising prices of Onion, Potato and Tomato; Another 31% likely to be impacted once per kg prices cross INR 50 for these items

June 19, 2024, New Delhi: The summer monsoon set in two days early in Kerala this year but so far it has remained sporadic, leading to humid weather. In most states, with temperatures rising, power cuts and water shortages are being reported. The result is, there is more demand for fruits and vegetables, which have become pricier. The prices of essential vegetables i.e. onion, potato and tomato have also shot up by 20% to 50% in the last few weeks.

Vegetable vendors blame reduced supply for the rise in prices of vegetables. Farmers state that lack of rainfall and poor water availability besides the high temperature has affected production. India’s food inflation is expected to rise, after hitting a four-month high of 8.7% in April from 8.5% in March. Even rural consumers are witnessing a sharper uptick of 8.75%, according to data released by the statistics ministry. While announcing the bi-monthly monetary policy on June 7, Reserve Bank of India (RBI) Governor Shaktikanta Das warned that the exceptionally hot summer season and low reservoir levels may induce more stress on the summer crop of vegetables and fruits. The rabi arrivals of pulses and vegetables need to be carefully monitored, according to Das. Food inflation has been taking a toll on the Indian economy since 2023, with several categories witnessing significant inflation. This includes vegetables at +28% YoY, pulses at +17% YoY, cereals at +8.6% YoY, meat and fish at +8.2% YoY, spices at +7.8% YoY and eggs at +7.1% YoY, according to government data.

Given the increase in chatter around pricing of essential vegetables on the platform, LocalCircles has conducted a national survey to find out how much more are households having to shell out and whether high vegetable prices are impacting the buying pattern and leading to reduction in consumption for some households. The survey received over 27,000 responses from household consumers located in over 316 districts of the country. 61% respondents were men while 39% respondents were women. 40% respondents were from tier 1, 28% from tier 2 and 32% respondents were from tier 3, 4 and rural districts.

2 in 3 household consumers surveyed confirm paying INR 25/kg or more for tomato, INR 30/kg or more for potato and INR 35/kg or more for onion

When most vegetables become unaffordable many households fall back on potato and onion and to some extent tomatoes. The price of fruits and vegetable vary sharply mostly according to the city/district and the quality of products. The survey first asked consumers, “What best describes the per kilogram price that your household paid for tomato, onion and potato in your latest purchase?” Out of 13,597 consumers who responded to the question 44% stated that they bought “tomato for INR 30 or higher, potato INR 35 or higher and onion INR 40 or higher” per kg; 22% of consumers indicated that they bought “tomato for INR 20-30, potato INR 30-35 and onion for INR 35-40”; 7% indicated that they bought “tomato for INR 20-25, potato for INR 25-30 and onion for INR 30-35” per kg; while 9% indicated that they bought “tomato for INR 20 or lower, potato for INR 25 or lower and onion for INR 30 or lower”. In addition, 18% of consumers surveyed did not give a clear answer. In essence, 2 in 3 household consumers surveyed confirm paying INR 25/kg or more for tomato, INR 30/kg or more for potato and INR 35/kg or more for onion.

16% household consumers surveyed cutting consumption or feeling the pinch of rising prices of Onion, Potato and Tomato; Another 31% likely to be impacted once per kg prices cross INR 50 for these items

As price directly impacts the household budget, the survey asked consumers, “At what price point for potato, onion and tomato are you likely to cut consumption or feel the pinch?” The question received 13,840 responses with 11% stating “if price of these essential items goes above INR 60/kg”; 20% of respondents indicated “if price of these essential items goes above INR 50/kg”; 11% of respondents indicated “if price of these essential items goes above INR 40/kg”; while 16% of respondents stated “we are already cutting consumption or feel the pinch. However, 29% of respondents stated, “our household is not likely to cut consumption or feel the pinch regardless of the price of these items” and 13% of those surveyed did not give a clear answer. To sum up, 16% of consumers surveyed shared that their household is cutting consumption or feeling the pinch of rising prices of Onion, Potato and Tomato; Another 31% are likely to be impacted once per kg prices cross INR 50 for these items.

In summary, 2 in 3 household consumers surveyed confirmed paying INR 25/kg or more for tomato, INR 30/kg or more for potato and INR 35/kg or more for onion. While tomatoes are still affordable at these prices, potato and onion are now selling at much higher rates than their average price of INR 20/kg. The survey also finds that 16% of household consumers surveyed are already cutting consumption or feeling the pinch of rising prices of Onion, Potato and Tomato; while another 31% are likely to be impacted once per kg prices cross INR 50 for these items. During the height of summer and monsoon there is a tendency for vegetable prices to rise steeply. Given the experience of the past, the government and local administration needs to be more proactive so that stockists and retailers do not take undue advantage of the situation.