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Tomatoes found to be the biggest driver of food inflation in India

The humble tomato is the single-biggest driver of the recent spurt in inflation in India according to official data. 

It alone added as much as 78 basis points (bps) to the wholesale price index (WPI) in July and 76 bps in August, pushing up headline WPI inflation to 1.88% and 3.24% in July and August, respectively. 

Similarly, tomato drove up retail inflation, based on the consumer price index (CPI), by 45 bps in July to 2.36% and 62 bps in August to 3.36%, according to an FE analysis. 

Interestingly, key tomato-producing states – Andhra Pradesh, Madhya Pradesh, Karnataka and Odisha – witnessed lower than the headline retail inflation in August, thanks to good supplies there, the data showed.

Importantly, a price crash since late last year kept tomato inflation under check. Now, an unfavourable base (tomato inflation remained mostly negative in both the WPI and the CPI between September 2016 and June 2017) and elevated prices mean inflationary impulse caused by this commodity will continue to persist in the coming months, putting pressure on food as well as headline inflation. 

Publication date: 9/19/2017


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