Tomatoes Fuel Inflation in India

In late June and early July, tomato prices skyrocketed in Indian markets, rising about 4.5 times to 120 rupees ($1.45) per kilogram in a very short time. According to the Indian newspaper Business Standard, in the southern state of Tamil Nadu, the price has already reached 250 rupees per kilogram, and local authorities were forced to resort to state subsidies to prevent further price increases.

The reason for this surge was monsoon rains that damaged the first crop of this year and subsequently affected supply chains. At the beginning of 2023, a kilogram of tomatoes in India cost an average of 22 rupees.

According to the Indian newspaper, it cannot be ruled out that a nearly five-fold increase in the price of tomatoes, as well onions (two of the main ingredients in traditional Indian cuisine), could cause massive protests among the Indian population. In the past, some political parties have been defeated in regional elections precisely because of their inability to curb the food price race.

According to the newspaper, excessively high prices could prevent the Reserve Bank of India (Central Bank) from stimulating economic growth and keeping consumer inflation under control.

Rising tomato prices have become one of the hottest topics in the Indian media. Journalists write that tomatoes in India are now more expensive than gasoline, which peaked at $1.34 per liter in June.