India faces food inflation risk as monsoon outlook weakens

India’s monsoon outlook improved in July after a sharp early-season deficit, but forecasters expect below-normal rainfall in August as El Nino conditions strengthen.

Rainfall in July was about 1% above the long-period average, narrowing the cumulative deficit since June 1 to 12.6% by the end of July from 35.4% at the end of June. The India Meteorological Department expects August rainfall, and rainfall for August and September combined, to be below 94% of the long-period average.

Weaker or uneven rainfall could hurt crop growth, tighten food supplies and pressure prices. The Reserve Bank of India has flagged weather risks to food prices and rural demand, while S&P Global Ratings expects the broader macroeconomic impact to remain manageable.

Read the full story at Moneycontrol.com.