•A new RBI study reveals that sharp and recurring spikes in tomato, onion, and potato (TOP) prices are the primary source of volatility in India’s headline retail inflation.
•The paper, "Retail Inflation Volatility in India: Sources, Determinants, and Implications," highlights that much of the fluctuation in headline inflation stems from the vegetables sub-group, particularly TOP.
•Vegetables, along with pulses, spices, and edible oils, account for the largest price swings, with over 80% of headline inflation variation attributed to vegetable prices alone in 2025–26 (up to August).
•Commodity-specific shocks (onion in 2019–20, potato in 2020–21, tomato in 2022–25) linked to weather and supply bottlenecks amplify overall inflation due to price spillovers among vegetables.
•Supply-side interventions like buffer stock releases and export restrictions effectively contain inflation volatility and curb spillover effects, preventing persistent broad-based inflation despite shocks.
