Mumbai: India is facing the risk of prolonged food inflation as poor monsoon rainfall, rising agricultural production costs and concerns over winter crop yields put pressure on supplies and prices of essential food items, including wheat, rice, pulses, milk and poultry.
The rising cost of food is placing additional pressure on household budgets, particularly among lower income families who are already struggling with the cost of daily necessities. Economists warn that food inflation could remain high in the coming months if agricultural production fails to recover and international commodity prices continue to rise.
India's retail food inflation increased to 7.74 per cent in September 2026, compared with 5.97 per cent in August, according to provisional government figures. Overall retail inflation also increased from 4.83 per cent to 5.54 per cent during the same period.
Food inflation was higher in rural areas, reaching 8.06 per cent, compared with 7.18 per cent in urban areas. The figures highlight the growing pressure on household budgets, particularly in rural communities that depend heavily on agriculture.
The weak monsoon has become a major concern for farmers preparing for the winter cropping season. Insufficient rainfall has reduced soil moisture in several agricultural regions, raising fears that wheat, chickpeas and other winter crops could be affected.
The difficulties are already being felt by farmers in Maharashtra. In Rajewadi village in Jalna district, farmer Amarsingh Gushinge, 78, says he is struggling to prepare his land for wheat and chickpea cultivation because of inadequate soil moisture and limited financial resources.
The Jalna district has received around 48 per cent less rainfall than its average, according to figures cited in the report. The situation illustrates how poor rainfall can affect farmers' ability to plant crops and maintain agricultural production.
On May 29, the India Meteorological Department forecast that seasonal monsoon rainfall would reach around 90 per cent of the Long Period Average, with a margin of error of plus or minus 4 per cent. Government figures released on August 12 showed that cumulative rainfall was 12 per cent below the average as of August 2.
The rainfall shortage has increased concerns about the Rabi season, when farmers generally plant wheat, chickpeas, mustard and other crops during the winter months for harvesting in the spring.
Food price pressures are also spreading beyond grains and vegetables to protein rich products such as milk, eggs and poultry. Higher prices of animal feed, transport, packaging and energy are increasing production costs for farmers and food businesses.
Uday Singh Bayas, president of the Indian Poultry Equipment Manufacturers Association, said corn and soybean feed account for around 60 to 70 per cent of poultry production costs. Higher feed prices are therefore placing additional pressure on poultry producers.
Uddhav Ahire, chairman of Anand Agro Group, expects broiler prices to increase from January 2027 as production costs rise and supplies become tighter.
Milk, dairy products and eggs are also becoming more expensive. Inflation across these products increased to 5.1 per cent in September from 4.8 per cent in August, according to the report.
Economists warn that prolonged increases in the prices of pulses, poultry and dairy products could affect the diets of lower income households. Madan Sabnavis, chief economist at Bank of Baroda, has warned that families may be forced to reduce their consumption of protein rich foods if prices continue rising.
Sugar production is another concern. India's domestic sugar output is expected to remain below consumption for a second consecutive year. Industry estimates suggest that production could remain below 27.5 million tonnes, while domestic consumption could exceed 29 million tonnes.
The government has approved duty free imports of one million tonnes of sugar in an effort to address the supply gap. However, higher international prices, a weaker Indian rupee and increased shipping costs could limit the relief provided by imports.
Rahil Shaikh, managing director of MEIR Commodities India, said sugar production may not recover significantly until late 2028, assuming favourable rainfall in 2027.
Rice and wheat markets are also facing uncertainty. Although India has substantial rice stocks, supplies of some varieties preferred by consumers in southern states have become tighter in certain markets. Differences in regional food preferences mean that sufficient national stocks do not always guarantee affordable supplies of every variety in local markets.
Wheat prices have also reached a nearly two year high amid concerns about warmer winter conditions and their possible impact on the next harvest.
International market pressures are adding to the difficulties. Vegetable oil prices have also faced pressure from production concerns in other countries and disruptions to supplies from the Black Sea region linked to the Russia Ukraine war. A weaker Indian rupee and higher freight costs are making imported food commodities more expensive.
The inflation situation is creating an additional challenge for the Reserve Bank of India. The central bank has a medium term retail inflation target of 4 per cent, with a permitted range of 2 to 6 per cent. September's overall inflation rate of 5.54 per cent was close to the upper limit.
The RBI raised its policy repo rate by 25 basis points to 5.50 per cent in October, its first increase in nearly four years.
Devendra Pant, chief economist at India Ratings and Research, expects food inflation could approach 10 per cent during the October to December quarter. He also expects the central bank could increase interest rates by another 50 to 75 basis points, possibly at its December policy meeting.
However, higher interest rates cannot directly address problems caused by poor rainfall, reduced soil moisture or shortages of agricultural supplies. Further increases could also make borrowing more expensive for households and businesses.
The government has begun preparations for the Rabi season, with Agriculture Minister Shivraj Singh Chouhan launching the Rabi Campaign 2026 on September 28. The campaign emphasises scientific crop planning, better water management, timely agricultural inputs and stronger coordination between central and state governments.
The next official inflation figures, covering October, are scheduled for release on November 12. They will provide a clearer picture of whether food price pressures continued to increase after September.
With winter crop planting underway and production costs remaining high, the coming months will be important for India's food supply and household budgets. The extent of rainfall recovery, agricultural output and international commodity prices will play a major role in determining whether food inflation can ease.