Food inflation is still a cause for concern, says Nestle India's Narayanan

livemint.com:

New Delhi: Packaged food company Nestle India on Thursday said it needs to monitor the specter of food inflation after a deficit rainfall in August is expected to impact kharif crop sowing. However, Suresh Narayanan, the chairman and managing director of Nestlé India, said consumer demand at the moment remains “stable and robust". “Now, it is seeming reasonably clear with the deficit of monsoons, already reported at 30%, even if kharif sowing is good, kharif productivity might get impacted.

And with this el-nino effect, still not having fully played out, we still have to watch for the specter of food inflation. There will be pressure in terms of food inflation, headline inflation will get mitigated because of the various steps that the government will take but food inflation is still a cause for concern," Narayanan told reporters on Thursday. To be sure, the erratic progress of the southwest monsoon has resulted in a spike in the prices of the domestic food basket, ratings firm CareEdge said in a report.

Meanwhile, August rainfall deficit stood at 36%. As a result, overall monsoon rain is in IMD’s ‘below normal’ category with 10% below the benchmark long period average during 1 June-31 August, Mint reported on Thursday. “On the one hand, excess rainfall over a short period has resulted in flooding in certain parts of India, adversely impacting the production of certain crops; on the other hand, significant deficit rainfall in certain pockets has adversely affected the sowing activity," CareEdge Ratings said in a note dated 29 August.