According to CareEdge Ratings, despite an overall improvement in the performance of monsoon compared to last year, the agriculture sector continues to remain at risk due to regional disparities in rainfall.
CareEdge Ratings report reveals that major agrarian regions, particularly in Northern India and the Gangetic plains, continue to experience significant deficits in rainfall. As of the last week of August, Kharif sowing is 97% complete. However, compared to recent years with normal monsoons (2021 and 2022), the sowing of pulses and some oilseeds has lagged, potentially adding to price pressures given their import dependence.
Global edible oil prices have recently exited a deflationary period due to global factors, and the risk of these prices passing through to the domestic consumption basket remains a key concern.
Additionally, lower reservoir levels, reflecting the rainfall pattern in some regions like northern India and a few states in east India could impede the prospects for Rabi sowing, which largely depends on irrigation.
Rajani Sinha, Chief Economist, CareEdge Ratings said, “At this juncture, monitoring food prices is crucial, especially as the base effect is expected to turn adverse ahead of the early festive season this year. These factors could slow the moderation of already high food inflation, increasing the risk of entrenching higher inflation expectations. Recent surveys indicate that since March 2024, inflation expectations have risen. Lagged sowing of pulses compared to years with normal monsoons and na ..
Source Name : Economic Times