India faces the prospect of increased food prices amid concerns over a poor monsoon.

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Initial expectations of normal to above-normal rainfall in June have not materialized as anticipated. Forecasts by the India Meteorological Department (IMD) and Skymet suggested favorable conditions for a robust rural recovery and potential relief from escalating food prices. However, actual rainfall data for June revealed a 17 percent deficit compared to the long-term average (LTA).

Monitoring of the monsoon patterns indicates significant regional variations: the northern and western regions experienced a shortfall of 61 percent, central India faced a deficit of 28 percent, while the east and northeast saw a marginal 7 percent deficiency. In contrast, the southern peninsula received a surplus of 10 percent rainfall. Despite revising its June forecast from 'normal' to 'below normal' due to the sluggish progress of the monsoon, IMD maintains its outlook for above-normal rainfall throughout the year.

Approximately half of India's agricultural land depends heavily on the monsoon for irrigation. A poor monsoon season could potentially reduce agricultural yields, leading to higher food prices and inflationary pressures.

The delayed onset and uneven distribution of rainfall have delayed the sowing of kharif crops such as sugarcane, cotton, rice, and soybeans. This delay is expected to impact both current food production and the subsequent rabi season, as farmers will have less time to prepare their fields after the kharif harvest.

Furthermore, ongoing heatwave conditions have exacerbated supply-side challenges, particularly affecting retail food prices. Vegetable prices have seen a significant increase, with prices of potatoes, tomatoes, and onions rising sharply. Economists note substantial annual price increases across various food categories, including vegetables (45.1%), pulses (13.5%), cereals (9.4%), and milk (3%).

The lower-than-expected rainfall has also affected reservoir levels, which currently stand 19 percent below last year's levels and 9 percent below the long-term average as of June 20. Only certain regions, such as Ganga and Narmada, have reported surplus levels.

Expectations of abundant rainfall were hoped to alleviate rural distress, which has been evident in subdued sales growth reported by leading FMCG companies in rural markets. These markets play a crucial role in driving festive demand, contingent upon the future progression of the monsoon over the upcoming months.