The effect of rising prices of food items is not visible to all households at once. This gradually affects the monthly budget. Rising prices of onions and cooking oil, rising prices of pulses – all these can make buying the same items very expensive over time. But this time the prices of all food items have not been affected equally.

According to government data, onion prices rose by 48.27% in August compared to last year, while tomato prices fell by 31.09% and potato prices by 13.14%. However, the fall in the prices of some commodities was not enough to offset the rise in the prices of others. Meanwhile, food inflation rose to 5.95 percent in August from 5.52 percent in July, while core retail inflation rose to 4.82 percent from 4.45 percent.

The big question now is how long this pressure on household food costs will last. With a less-than-normal monsoon, the arrival of the kharif crop and weather-related risks due to El Nino, the next few months may determine when food inflation finally starts to ease.

Food inflation may remain high

The situation is not looking good now. Vikram Chhabra, senior economist at 360 Value Asset, predicted in an ET report that food inflation will rise from around 6 per cent in August to 7-8 per cent in the next three to six months. This means that grocery bills are not expected to drop anytime soon. Other economists also largely agree with this view.

ICRA Chief Economist Aditi Nair estimates that food inflation will rise above 7% by October 2026 and remain above 5% for the rest of the fiscal year. Nair said there is a risk of inflation rising further. He pointed out the uncertainty regarding the uneven distribution of monsoon and its impact on crop production.

Similarly, Dheeraj Nim, economist and FX strategist at ANZ, believes pressure will remain at least through October-November. However, there may be some relief when the winter rabi crop and the new kharif crop hit the markets. Therefore, the timing and quality of the next crop is very important. If the supply improves, the current pressure may decrease somewhat. If not, households may once again face higher prices.

Sudden surge in onion prices

Onions show how quickly supply disruptions can reach home kitchens. PHDCCI’s Juneja said in an ET report that the impact of the increase in wholesale onion prices can be seen very quickly in the retail market, as people buy onions frequently and retailers keep replenishing stocks regularly. However, he said that this change in prices is not directly uniform. Transportation, handling, storage, spoilage and wholesale and retail margins also affect the final price.

The current surge in onion prices has generally lasted longer than vegetable price hikes. Gaura Sen Gupta, chief economist at IDFC First Bank, said in a media report that vegetable price hikes usually last for about two months and supply-related measures help reduce pressure. This is the third month that onion prices have increased and it coincides with the festive season, which could further add to the demand pressure.

However, he is hopeful that the pressure on onion prices will ease soon due to the multi-season vegetable crop and government measures to increase supply. There is hope for relief, but economists warn that onions are only part of a much larger basket of food items.

El Nino can cause trouble

Weather-related risk is the most serious. RBI has been warning about this risk for several months. In April, the central bank said higher energy prices and potential weather disruptions have increased inflationary pressures on food prices.

As of June, the Monetary Policy Committee said there was uncertainty over food supplies due to a weaker-than-normal forecast for the southwest monsoon and El Niño.

The latest data shows why this concern persists. According to the Indian Meteorological Department, as of September 21, total monsoon rainfall has been deficient by about 15 percent, and the distribution of rainfall has also been uneven.

Chhabra of 360 One Asset said in a media report that erratic monsoons are the biggest risk and high crude oil prices as the second risk.

ANZ’s Nim termed El Nino as the “biggest risk factor” and warned that it could affect both kharif yields and water levels in reservoirs. Irrigated rabi crops, such as wheat and pulses, may be affected as early as 2027 due to low water levels in reservoirs.

IDFC First’s Sen Gupta also warned that a strong El Nino condition could affect both Kharif and Rabi production. High temperatures in winter may put pressure on perishables and affect the yield of rabi crops.

Watch out for rice, oilseeds and pulses

The risk is not the same for all crops. Crisil Intelligence Director Pushan Sharma said in an ET report that oilseeds (especially soybeans and groundnuts) prices are highly volatile. This is due to low opening stocks (carry-in stocks), strong demand for pulp and high edible oil prices across the globe. Paddy prices are also expected to remain stable due to strong domestic and export demand, although good initial stocks may provide some relief.

Nayyar said sowing of rice has declined compared to last year, which may put pressure on prices, while sowing of pulses is higher than last year’s level. However, more sowing does not mean that the yield will be higher, as the yield will also depend on the moisture conditions and the availability of essential items (inputs).

Sharma further said that pulses and coarse grains can be affected by weather disturbances, especially pigeon pea and maize. Vivek Kumar, economist at Quanteco Research, also pointed to the decline in rice, cotton, sugarcane and oilseeds area (sown area) in the latest kharif sowing data.

However, the situation is slightly better in case of some grains. According to Sen Gupta, prices of non-perishable grains should remain stable as India has more than adequate buffer stocks.

Therefore, the overall situation is not expected to remain the same: depending on crop, stock and weather conditions, prices of some food items may decline, while prices of others may remain under pressure.

Pressure from West Asia

As farmers and households continue to face climate-related risks, conflict in West Asia has opened up other sources of inflation. The impact on the kitchen budget is not immediately visible, but it can last for a long time. Crude oil is used to make diesel for agricultural machines and irrigation pumps, while liquefied natural gas (LNG) is an essential raw material for making urea. Transportation costs affect the transportation of crops from farms to markets and retailers, while higher energy and logistics costs can also increase processing and storage costs.

In India, inflation based on wholesale inflation rose to 9.92 percent year-on-year (YoY) in August from 9.78 percent in July, while the WPI food index rose to 7.05 percent from 6.65 percent. The inflation rate of fuel and electricity was 22.93 percent in August. However, economists advise that not every increase in food prices should be linked to this conflict.

Juneja said the recent rise in onion, garlic and ginger prices also reflects crop availability, weather conditions, market revenue and other supply-related factors. However, global connectivity is already evident in the case of some products. Sen Gupta said that India is highly dependent on imports for edible oil, due to which the category remains highly influenced by international prices.

Additionally, according to CRISIL’s Sharma, higher transportation rates, petrochemical raw materials and packaging costs have increased prices of crop-protection products by an estimated 5-15 percent. Crops such as apples, grapes, paddy, soybeans and cotton are particularly affected due to their high dependence on these inputs.

The question of 2027 is becoming important

A recent outlook from the Asian Development Bank (ADB) casts a long light on the current food situation. The ADB has warned that a stronger-than-expected El Niño could hurt crop yields and increase food inflation. In addition, rising costs of irrigation, energy and fertilizers may further increase these pressures. In 2027, the scope of its impact may increase significantly. At that time, volatility in commodity prices is expected to reach its peak.

This does not mean that food inflation in India will remain high until then. But this explains why economists are reluctant to give a specific date for the current pressure on food prices to end anytime soon.

Currently, the situation depends on many factors being favorable simultaneously. If the arrival of the kharif crop goes well, onion prices fall, water levels in reservoirs improve and the impact of the energy crisis in West Asia eases, food inflation may start to moderate from late 2026 or early 2027. If the impact of El Nino remains severe, ravi sowing is affected and energy and fertilizer costs may take longer.