EN REQUEST DEMO Home / Blog / Indian vegetable prices collapse on oversupply Inflation Commodities Indian vegetable prices collapse on oversupply We chart the deflation and its drivers. By Denys Liutyi on December 1, 2021 LinkedIn Twitter Email More Food prices may be rising in many emerging economies, but in India, the opposite is happening. While wholesale and consumer food prices rose in the run-up to the global pandemic, both have since dropped sharply. ‍ Macrobond users, access the chart here The fall was driven by the collapse in vegetable prices. The sector has been experiencing severe deflation since last year, falling to a record minus 19.4% in October 2021. Macrobond users, access the chart here Negative consumer price inflation was observed across every type of vegetable except lemons and green chilies, which represent just 4% of total vegetable crop production. ‍ Macrobond users, access the chart here ‍ Looking at wholesale, even rising prices for tomatoes, aubergines (brinjal) and peas – which together represent more than one third of total vegetable output – were unable to slow overall deflation. ‍ Macrobond users, access the chart here So, what’s behind these dramatic price falls in India’s vegetable sector? Before we go into the causes, we can first discount fertilizer prices, which are soaring amid a global natural gas shortage. Macrobond users, access the chart here The most obvious cause of India’s vegetable price deflation is oversupply. Monthly vegetable exports may have climbed to about USD80 million but that accounts for just 2.9% of the country’s food exports. For an economy severely dependent on agriculture, such low volumes of trade could lead to a surplus within the domestic market. Meanwhile, although imports have risen since June, the volume is nowhere high enough to make a difference. ‍ Macrobond users, access the chart here Higher crop yields are also contributing to oversupply. Annual agricultural production grew 4.5% in the last quarter. ‍ Macrobond users, access the chart here ‍ While falling food prices may be good news for consumers, the industry will suffer in the longer term if the issue is not addressed. We can already see the impact on wages for farmers, which are sliding. ‍ Macrobond users, access the chart here To prevent further deflation in the sector, the Indian government will need to ramp up exports, stimulate domestic demand and continue limiting imports. PRODUCTS Overview Desktop solutions Data feeds Premium datasets Macrobond/FactSet Equity Factor Aggregates FEATURES Macrobond data Data visualisation Collaboration tools SERVICES Customer onboarding WHO WE SERVE Strategists Economists Portfolio Managers Asset Allocators Quantitative Analysts INSIGHTS News Blogs Charts of the Week Resources ABOUT US Who we are Partners Leadership team Testimonials Careers Contact SUBSCRIBE TO OUR NEWSLETTER © 2021 Macrobond.com. All rights reserved. Privacy Policy Terms & Conditions We use cookies to improve your experience on our site. To find out more, read our updated privacy policy and cookie policy. ACCEPT