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New Delhi, July 14 – With a weightage of 0.57 per cent in the CPI basket, pricing pressures in Tomato is unlikely to substantially impact the headline inflation unless prices of other two main crops (potato and onion) move in tandem, JM Financial Institutional Securities said in a research.
The higher than expected headline inflation (4.81 per cent vs 4.6 per cent est.) was on the back of sharp uptick in inflationary pressures in the vegetables and pulses category.
The deflationary trend in the vegetable category almost reverted to inflationary phase (-0.9 per cent YoY vs -8 per cent YoY prior) in June’23, with a substantially strong momentum (12.2 per cent MoM vs 3.6 per cent MoM prior).
Within vegetables, retail prices of tomato increased to Rs 57/kg by the end of June, while at the start of the month it was available at Rs 25/kg. It is pertinent to note that by 10th of July, tomato was trading at Rs 105.4/kg which would reflect in the July month’s inflation print unless appropriate supply side interventions are taken to ease the pricing pressures, the report said.
Tomato has a weightage of 0.57 per cent in the CPI basket while Tomato, Potato and Onion collectively forms 2.2 per cent of the CPI basket, we believe that pricing pressures in tomato alone would marginally impact the CPI print unless the prices of other two crops move in tandem, the report said.
The sharp sequential uptick in pulses (3.42 per cent MoM) was offset by the weakness in oils and fats category (-3.24 per cent MoM) in June’23.
Unlike domestic inflation print, globally food prices continued to ease across categories. As per the FAO index, even cereal prices were down in June (24 per cent YoY, 2.1 per cent MoM).
The deflationary trend in vegetable oil prices (-18 per cent YoY, -3.24 per cent MoM) was on the back of ample global supplies coinciding with subdued global import demand.