Vegetable price shocks require experts to keep a watch on food inflation, says Crisil Ratings

Vegetable price shocks, although beyond the direct scope of monetary policy, require experts to keep a watch on food inflation, Crisil Ratings said in a study that pointed to easing in the prices of tomatoes, onions and potatoes, and non-food items to mitigate concerns about the purchasing power of the common man.

The report is based on the Google Trends index using data from Google search volumes for a particular time period. With 600 million smartphone users in the country, the Google Trends data is likely to capture the larger sentiment of the country.

“The data could have an urban bias, as rural mobile penetration trails that of urban areas and rural population is less likely to search for prices online,” said the report.


Still, anchoring inflation expectations is a critical factor that guides monetary policy. The Monetary Policy Committee (MPC) cannot directly control food inflation, but persistence of it can become generalised and enter headline inflation. This, in turn, would require a MPC response, Crisil said.

The maximum search interest for tomatoes was in July-August 2023 when tomato inflation was the highest in five years. Onion prices reached their peak in December 2019