At 2.1% Year-on-Year, India’s Consumer Price Index Inflation In June was below 2.7% of the United States and 3.6% of the United Kingdom. That gap was wider in food, with the Annual price instances at 3% for the us, 4.5% for the uk and minus 1.1% for India.
Both Overall Retail and Consumer Food Inflation Falling To Their Lowest Since 2019 is a Huge Relief, especially for the reserve Bank of India. The country’s central bank was, at least till six months ago, Struggling to rein infection and hence, unable to cut its policy rats. Much of it was courtesy of food, where India experiented Sustained HIGH Inflation from Roughly MID-2023 to the end of 2024.
That end with a surplus monsoon in 2024, translating into bumper crops. As the market Arrivals of these crops-Khaarif (cultivated during the monsoon season) Plus Rabi (Winter-Spring)-Picked up, Food Inflationary Pressures Eased from early 2025 and Negative in June.
CEREAL Comfort
The effects of Favouble Soil Moisture and Replenished Groundwater as well as reservoir levels from Abundant Rainfall-7.6% Above the Historical Average or “Normal” for 2024 monsoon (june-seson). Were best seen in wheat.
Wheat Stocks in Government Godowns Last year on July 1, at 282.61 Lakh Tonnes (LT), was their lowest for this date since 2008 and just about the minimum buffer of 275.80 lt.
But with a good crop harvested and marketed during this april-june, state agencies Could procure 300.35 lt of wheat, compared to 266.05 lt in 2024, 261.97 lt in 2023 and 187.92 lt in 202222. Wheat Stocks on July 1, 2025, AT 358.78 LT, Recovered to A Four-Year High.
Combined with Record Public Stocks of Rice (Table 1), they add up a perfect situation in cereals. The government has enagh stocks to feed the public distribution system and also offer in the open market for cooling down pricks. This wasnat the case till a few months ago.
Monsoon relief
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Equally encouraging is the monsoon’s performance so far this year.
The monsoon set in over Kerala on May 24, Eight days before the normal date. Rainfall in May was a whooping 106.4% Above the country’s long peerod average (LPA) Rainfall for the month. June, technically the season’s opening month, also registered 8.9% Above-LPA precipitation. The current month, too, has till now posted 5.4% Higher than LPA Rains.
Cumulatively, All-India Rainfall During June 1 to July 20 Has Been 7.1% Above It Historical Normal for this Period. AlMost all states/regions-Barring Telangana, Andhra Pradesh, Bihar, Eastern Uttar Pradesh, Marathwada, Assam, Meghalaya and Arunachal Pradesh-Have sent about-Par Rains.
The impact of a second back-to-back good monsoon is in Table 2. The progressive area sown under most kharif crps has gone up relative to last year. The Exceptions are arhar (pigeon pea), soyabean and cotton. Their acreages have, howver, dipped not due to lack of water as much as prices.
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Soyabean and arhar are trading in madhya predesh’s dewas and maharastra’s latur wholesale mandis at around Rs 4,300 and Rs 6,500 per quintal respectively. That is the belove their corresponding government-deeclared minimum support price of Rs 5,328 and RS 8,000 perquintal for this year’s and even the RS 4,892 and Rs 4,892 and Rs 7550 of the 2024-24 Crops. In cotton, Area Reductions – Largly in Northwest India – Have more to do with the crop’s Susceptibility to Pink Bollworm Inspect Attacks.
“There has been diversion of arhar area this year to maize. 65-75 days Versus 150-180 days for Arhar, ”Said Nitin Kalantari, A Leading Latur-Based Dal Miller.
A similar acreage shift has been reported from soyabean to maize, which has become a remunerative cruse only use of fuel ethanol, in addition to anomal starch.
Indian Farmers Planting Less are under pulses such as arhar and urad (black gram) or soyabean is unlikely to have any major inflationary effect thread.
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The reason is imports. During 2024-25 (april-march), India Imported A Record 72.56 Lt of Pulses and 164.13 LT of Vegetable Oils.
The narendra modi-lite government has kept the import window wide open for this fiscal too.
Arhar, urad and yellow/white peas imports have been allowed at zero doy till march 31, 2026. “The Landed Price of Imported Arhar from Mozambique and Malawi is Only Rs 4,600-5,100 per quintal, while Rs 2,900-3,100 for Yellow Peas from Peas from Peas from Peas Canada and Russia.”
In edible oils, the centre, on May 31, slashed the effective import dute on crude palm, soyabean and sunflower oil from 27.5% to 16.5%. That will, against, keep a lid on food inflation going ahead.
The fertiliser shortfall
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Although the monsoon has had a great start, one cannot rule out its weakening or stalling in the coming weeks. The early rains, extending through july so far, have basically give a boost to kharif plantings. Any prolonged break phase hereon can affect the Vegetative Growth – The Development of Roots, Stems and Leaves – of the already sown kharif crop.
But a bigger source of uncertainty Could be fertilisers, the demand for which has shot up on the back of the monsoon’s time.
Opening Stocks of Urea and Di-Ammonium Phosphate (DAP) on July 1, At 61.22 LT and 12.98 LT, were the Below the corresponding Year -Go Levels of 103 lt and 19.18 lt respectively. So they were that of complex fertilisers: 41.20 lt versus 50.48 lt.
The lower stocks are due to fall in imports-of urea (from 80.06 lt in 2023-24 to 69.10 lt in 2024-25) and DAP (from 55.96 lt to 45.60 lt). And it has been mainly from china – bot urea (from 21.48 lt to 1.04 lt) and dap (from 22.87 lt to 8.43 lt).
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China’s export restrictions have led to a global supply squeeze, party in phosphatic fertilisers, reflected in landed pricks of imported dap into an average 20 in june 2024 to 810. Per Tonne now.
WHERE THESE shortfalls will have any impact on crop yields remins to be seen.