The prices of tomatoes and onions are the most volatile in Indian markets. The Economic Survey 2021-2022, released on Monday, explores the reasons behind the variations in the prices of these two staple vegetables. The survey argues that seasonality in production and irregular shocks contribute equally to volatile prices. The unexpected price shocks to these two perishable commodities were triggered by unseasonal rains and prolonged drought. A detailed look at the survey's conclusions.
Ups and downs
The graph shows the average retail price of a kg of tomato and onion in India. Sharp spikes can be seen at both regular and irregular intervals.
Chart 1 ups and downs economic survey prices
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Seasonal variation (Tomato)
The graph shows the average change in the retail price of tomato per kg compared to the long-term price trend. As 70% of the total tomato production is harvested between December and June, the prices dip due to a surge in supply. On the other hand, between July and November, as only 30% of the total production is harvested, the prices rise due to low supply.
Chart 2 tomato variation economic survey prices
Price shocks (tomato)
The graph shows the average change in the price of tomato after accounting for seasonal changes. The spikes are therefore increases in retail prices over and above the expected rise due to seasonality. The five identified price shocks in the graph were mostly due to drought or heavy rainfall in various Indian States.
Chart 3 tomato price shock economic survey
Seasonal variation (onion)
The graph shows the average change in the retail price of onion per kg compared to the long-term price trend. As 70% of the total onion production is harvested between March and May, the prices dip due to a surge in supply. But in the rest of the months, prices rise due to low supply.
Chart 4 onion variation economic survey
Price shocks (onion)
The graph shows the average change in the price of onion after accounting for seasonal changes. The spikes are therefore increases in retail prices over and above the expected rise due to seasonality. The four identified price shocks in the graph were mostly due to drought or heavy rainfall in various Indian States.
Chart 5 onion price shock economic survey
Source: Economic Survey 2021-2022
Also read | The crux of the tomato price hike
