Rising food prices and a weak monsoon pose risks: India must act early to protect the most vulnerable

Based on the 2024 series, overall inflation increased to 3.4% last month, with rural inflation at 3.6% and urban at 3.1%. Food inflation was placed at 3.9% (4% in rural India and 3.7% in urban areas).

The trend of India’s food inflation outpacing overall inflation has firmed up since January, when overall food inflation was 2.1% (2% rural and 2.4% urban).

Food inflation almost doubled between January and March in rural areas. Within food groups, vegetable oils (9%) along with eggs (5.5%), meat (12.5%) and fish (7.3%) have seen prices firm up, with those for a few other major item groups such as cereals (-1.3%) going down.

Although inflation is rising, it is not yet very high. Price expectations, however, are on the ascent. While supply uncertainty could have pushed prices of vegetable oils up, other food groups seem better insulated. Low inflation in cereals is partly a result of record domestic and global production, along with low international prices. However, it is not current prices that should worry policymakers, but the likely trend ahead. Three factors could create pressures on food and overall inflation.

First, the fate of war negotiations between the US and Iran has again created uncertainty in the global market. This is not just over energy prices; it is likely to spill over to other primary commodities.

In general, an increase in oil prices puts upward pressure on primary agricultural commodities, both as a result of speculative activity and increased demand for producing biofuels.

Plus, there is likely to be a cost-push effect from costlier energy and fertilizers, both essential farm inputs that account for more than half the input bills. West Asia accounts for about 40% of India’s total fertilizer imports with this figure rising to almost two-thirds for urea, the dominant fertilizer.

While government subsidies could help lower or contain these prices in the short run, their availability itself may be a worry if war-related supply shortages persist. There are already attempts to regulate fertilizer sales by linking them with requirements. Then there will also be a statistical base effect that pushes up inflation (led by food) as the year unfolds.

Note that inflation was around 1% in the last four months of 2025 with food inflation negative.

What is likely to complicate matters further is the weather. First official predictions for this year’s monsoon from the Indian Meteorological Department (IMD) point to rainfall of just 92% of the long period average (LPA). Rainfall below 94% of the LPA is considered deficient. The extent of the deficiency forecast is the largest foreseen at this stage in three decades, though we had severe droughts in 2002 and 2009, both of which hurt farm output.

This year’s anxiety stems from an El Niño effect developing the Pacific Ocean that is likely to spell dry conditions in Asia, India included. Of course, further updates will arrive closer to the rains.

The impact of inflation cannot be seen in isolation of India’s larger food security challenge. Cost-push inflation and global uncertainty are likely to make the situation difficult to manage if essentials (including food) keep getting dearer.

Already, there have been protests and worker unrest in several states, with protestors demanding wage hikes. With the regular wages of large numbers having declined in real terms for more than a decade, the cost-of-living crisis is not just a statistical artefact but a reality for many. Deficient rains would only exacerbate the crisis if it leads to sharp decline in food production.

This inflationary rise is not driven by demand and therefore monetary policy measures are unlikely to be effective. What we require is a long-term plan for managing the supply shocks that are likely to emerge as a result of lower production due to monsoon uncertainty as well as other uncertainties around the availability of key agricultural inputs such as fertilizers.

While it is fortunate that the government has enough buffer stocks of foodgrains, the situation demands a multi-pronged approach. Protecting the poorest (including wage workers and others) through income support may be necessary at least in the short run. Apart from increased subsidies and transfers, employment generation programmes could also be used.

The author is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi.