Food inflation worries mount as scanty August rains hit key crops
onions increasing upside to the food inflation, which has jumped to 11.51% in July; up from 4.49% in June.
With rainfall deficiency of up to 40%, the dry weather conditions are likely to extend for a few days in September as well, said experts.
«August was highly deficient in rainfall and this dryness is likely to spill to September, at least the first few days of the month,» said GP Sharma, president of private weather company Skymet. According to IMD, from August 30 to September 6, the rainfall activity is likely to remain below normal for most parts of the country except northeast, east and adjoining central India.
As most of the kharif crops are waiting for a spell of showers, this extended period of dryness may not auger well for many kharif crops.
Dharmakirti Joshi, chief economist at ratings agency Crisil said, «During the last one-and-a-half months, the inflation risk has risen.
Food inflation is the key monitorable and the most potent threat to inflation. If the dry weather conditions that prevailed in August get extended, it can create an upside to food inflation.» Joshi said that augmenting supplies would be the only counter measure.
«However, the risk will be countered by the government measures to shore up supplies. Core and fuel inflation are expected to remain soft.
We think that the inflation risk will be balanced at 5.5%, which is our projection for inflation in the current fiscal,» said Joshi. India has been freely importing pulses and cooking oils and has stopped exporting rice and wheat to increase domestic supplies.
Maharashtra, which is the largest producer of onions, arhar and sugar; second largest producer of soyabean, cotton and a major producer of maize and jowar, have more than 40% of the
