Tuesday, 3 November
Englishहिंदी
Get the 7 am briefing
India and the world,
in English and Hindi
CricketCourtsMarketsGoaSupreme CourtInflationSpace
Sensex 76,917.85 +1.62%Nifty 50 23,810.85 +1.58%₹ / $ 94.74

EconomyInflation

Weak monsoon sets India up for a long spell of costly food, economists warn

Dry fields in Maharashtra, dearer animal feed and a sugar shortfall are pushing up prices from grain to chicken and milk, and one economist expects food inflation to touch 10% this quarter.

From the editorial desk · JalnaPublished
Women selling vegetables at a street market in Ahmedabad (file photo)
Women selling vegetables at a street market in Ahmedabad (file photo)Photo: Bernard Gagnon / Wikimedia Commons, CC BY-SA 3.0

Key points

  1. Retail food inflation rose to 7.74% in September, with headline inflation at 5.54%.
  2. India Ratings' Devendra Pant sees food inflation near 10% in October-December.
  3. Sugar prices are up nearly 30% in a year as consumption outruns output.

Indian households should brace for a long spell of expensive food, economists said on Tuesday, as the weakest monsoon in more than a decade hits crops, animal feed and sugar output at the same time.

In Rajewadi village in Maharashtra’s Jalna district, where rain has been about 48% below average this year, 78-year-old farmer Amarsingh Gushinge cannot sow wheat or chickpeas for the winter. “There’s not enough moisture in the soil to sow the next crop, and no money left to do so either,” he said.

From grain to protein

Retail food inflation rose to 7.74% in September, while headline inflation reached 5.54%, close to the Reserve Bank’s upper limit of 6%. Devendra Pant, chief economist at India Ratings and Research, expects food inflation to reach about 10% in the October-December quarter, and the RBI to raise rates by a further 50 to 75 basis points, starting with a second straight hike in December.

Protein is the hardest part to tame. Corn and soybean feed make up 60% to 70% of the cost of raising poultry, said Uday Singh Bayas, president of IPEMA-Poultry India, and producers have not yet passed on all of it. “Prolonged protein inflation could hurt lower-income households and force them to alter their diets,” said Madan Sabnavis, chief economist at Bank of Baroda.

Sugar is the sharpest pinch, up nearly 30% over the past year. Consumption is expected to top 29 million tonnes against output below 27.5 million, even after the government allowed 1 million tonnes of duty-free imports. With world prices above India’s and a weak rupee, imports offer little relief.