Why food prices may rise and stay elevated

The southwest monsoon in India this year has been erratic, with a significant impact on food prices. June, the start of the monsoon season, saw no low-pressure systems (LPS), resulting in 38% below normal rainfall. July experienced four LPSs, nearly the average, leading to good rainfall. August, however, saw the effects of El Niño, with six LPSs and a 16.3% rainfall deficit.

The monsoon season, as a whole, has been 14.7% below the long-period average as of September 13. This shortfall has severely affected 24 out of 36 meteorological subdivisions, particularly the southern states and Marathwada and Vidarbha regions of Maharashtra.

The agriculture ministry reports that kharif crop acreage is only 1.6% below the 2025 average, but fertilizer sales have seen a decline. Maize prices in Madhya Pradesh's Chhindwara market have risen to Rs 2,625 per quintal, up from Rs 2,165 last year. Arhar prices in Maharashtra's Akola have increased to Rs 8,600 per quintal, and soyabean prices in MP's Dewas have gone up to Rs 6,150 per quintal.

The United States Department of Agriculture has forecast a fall in India's rice and maize production, leading to concerns about lower yields and harvested produce due to El Niño's impact.

Looking ahead, El Niño remains in a "strong" state, with sea surface temperatures in the equatorial Pacific Ocean 1.8 degrees Celsius higher than normal. The NOAA projects a 90% chance of a "very strong" El Niño lasting until January. This could result in a short, warm winter, affecting upcoming rabi crops like wheat, rapeseed-mustard, and chickpea.

The situation is further exacerbated by the conflict in West Asia, which has not caused significant global food price spikes, but rising world food prices, disrupted trade logistics, and a strengthening El Niño could push prices higher.