Monsoon and crop risks remain key to price volatility ahead: Pushan Sharma

Consumers are seeing some relief at the grocery store, as prices of staples like tomatoes, onions, and potatoes decline sequentially. Pushan Sharma, Director, Crisil Intelligence, told ET Now that this is largely due to a high base effect from last year.

“No, we are seeing prices coming down due to a high base from last year. Last year, onion, potato, and tomato faced production issues, which drove prices up. This trend is expected to continue for the next few months,” Sharma said.

However, edible oils have spiked by 21%, driven partly by festive demand and global pressures. Sharma noted, “Vegetable oil prices rose after duties were increased. The contribution of oils to the overall food plate is only 4-5%, so the impact on consumers is limited.”

Looking ahead, Sharma expects food inflation to remain subdued for the next few months. “Food contributes about 50% to overall inflation. We are up against a high base, so the numbers in coming months will be lower,” he explained.

Energy costs, however, could offset some of the gains. “LPG prices increased by Rs 50, which affects the overall cost. Fuel contributes about 10% to a vegetarian thali,” he added.

Sharma also pointed out potential risks from the ongoing monsoon and perishable crops. “Monsoon rainfall can impact the kharif harvest. Perishable crops like onions and tomatoes may see price volatility. Excess rainfall this year is good for the rabi season,” he said.Consumers may enjoy temporary relief on food prices, but rising energy costs and climatic uncertainties remain key factors to watch.