Household Food Expenses Under Pressure from Rising Tomato, Cooking Gas Prices

Household food expenses are likely to remain under pressure in the near term as higher prices of tomato, vegetable oil and cooking gas continue to offset relief from lower potato prices, according to Crisil Intelligence's latest 'Roti Rice Rate' report.

The report said the cost of preparing a vegetarian thali at home rose 5 per cent on-year in June, while the cost of a non-vegetarian thali increased 6 per cent on-year, driven mainly by higher prices of tomato, onion, vegetable oil and liquefied petroleum gas (LPG).

According to Crisil, tomato prices increased 31 per cent on-year after delayed and lower summer crop planting caused by high temperatures in February and March. Vegetable oil and LPG prices also rose 10 per cent on-year each because of supply disruptions linked to the conflict in West Asia, while onion prices edged up as higher-priced stored rabi stocks entered the market. The increase in food costs was partly offset by a 14 per cent decline in potato prices following fresh rabi arrivals.

For non-vegetarian meals, the report said higher broiler prices also added to household expenses, which accounted for about 50 per cent of the cost, due to a tighter broiler supply. Chicken prices were estimated to have risen 7 per cent on-year because extreme summer heat affected poultry supply by increasing bird mortality, reducing weight gain and discouraging fresh chick placements.

On a month-on-month basis, the cost of vegetarian and non-vegetarian thalis rose 4 per cent and 3 per cent, respectively, in June as tomato, onion and potato prices moved higher compared with May.

The report implies that consumers may continue to face elevated food bills if prices of key inputs such as tomatoes, edible oils and cooking gas remain firm. However, continued arrivals of seasonal crops and an improvement in vegetable supplies could help moderate some of the pressure on household budgets in the coming months. For consumers, the trajectory of vegetable prices and global energy markets will remain key factors influencing the cost of preparing meals at home.