Higher-than-average monsoon rainfall may lower food costs, according to the finance ministry

Higher-than-average monsoon rainfall may lower food costs, according to the finance ministry

The Department of Economic Affairs has cautioned about weather shocks and geopolitical tensions and their impact on oil prices in its monthly assessment.

Forecasts of above-average rainfall suggest that food prices may ease: Finmin

According to a study by the finance ministry, the government anticipates a decrease in food costs since the India Meteorological Department (IMD) is forecasting above-average rainfall this year, which would increase output.

The Department of Economic Affairs stated in its March monthly economic review that "further easing of food prices is on the anvil as IMD is forecasting above-normal rainfall during the monsoon season, which is likely to lead to higher production, taking on good both the spatial and temporal distribution of the rainfall."

From 8.7% in February to 8.5 percent in March, food inflation in India decreased. One of the greatest obstacles to reducing inflation, which is still higher than the Reserve Bank of India's four percent objective, has been vegetables and pulses.

The government has implemented a number of measures to control prices, including tightening supply buffers for essential food items and periodically releasing them onto the open market, facilitating imports of necessities through trade policy measures, reducing stock limits to prevent hoarding, and directing supplies through specific retail locations.

Uncertainty surrounding food prices is a concern for the RBI's monetary policy committee in terms of inflation prospects.

Although a record Rabi harvest will contribute to a calming effect on grain prices, food prices are at danger due to the growing frequency of weather shocks. An additional risk factor is the impact of geopolitical tensions on oil prices. Nonetheless, given the IMD's forecast of an above-average monsoon this year, the chances for the Kharif crop seem promising at this early stage, the research said.