Price of vegetables, the most volatile component of food inflation, may be elevated for the next few months due to above-normal temperatures till June, rating company Crisil said.

Prices may ease after the monsoon starts in June, as forecast by the India Meteorological Department (IMD), the rating company said on April 25.

“The IMD has predicted an above-normal southwest monsoon in 2024. This augurs well for vegetable prices, but the distribution of monsoon is also crucial. IMD expects above-normal temperatures till June, which could keep vegetable prices elevated for the next few months,” Crisil said.

India is among the most climatically vulnerable countries and weather risks are only mounting. With weather conditions such as heat waves, flooding, storms and changing monsoon patterns, climate change is likely to have a dire impact on vegetable production and prices.

Rising temperatures could also exacerbate the pest problem, Crisil said.

Vegetables were responsible for about 30 percent of food inflation in FY24, much higher than their 15.5 percent share in the food index. While surging prices of tomatoes and onions made headlines in FY24, the price rise was not limited to them.

Supply disruption

Garlic and ginger saw triple-digit inflation of 117.8 percent and 110.4 percent, respectively. Other vegetables such as brinjal, parwal and beans also saw a spike in prices.

Vegetable inflation was 28.3 percent in March compared with 30.2 percent in February.

Erratic weather has disrupted supplies and fanned vegetable prices many times over the past few years.

Remedial measures such as the creation of buffer stocks and even imports are ineffective solutions, given the perishable nature of vegetables. Technologies such as cold storage can prolong the shelf life of vegetables, but India falls short on such infrastructure.

Short-term solutions such as restricting hoarding and curbing exports (of onions, for instance), only bring temporary relief. In FY24, weather-induced supply shocks kept the pressure on prices high, especially for onions and tomatoes, Crisil said.

In the previous financial year, there were several vegetable price shocks in India as turbulent weather played spoilsport. El Niño conditions led to warmer-than-average weather and also impacted the monsoon.

The southwest monsoon was below normal in FY24, at 94 percent of its long period average. The distribution of the monsoon, too, was uneven, with an unusually dry August.

August 2023 was the driest and hottest August, according to the IMD.