Early Monsoon Brings Relief and Inflation Fears

The southwest monsoon has arrived earlier than usual, the earliest onset since 2009, offering some relief from the scorching Indian summer. However, this welcome change could come at a cost, with prices of essential food items already beginning to rise.

Fast-moving consumer goods (FMCG) companies are also feeling the impact, as abundant rainfall has hurt summer product sales.

IMD Forecasts Above-Normal Monsoon

The India Meteorological Department (IMD) has revised its monsoon forecast for 2025, now expecting above-normal rainfall. The prediction has been increased to 106% of the long-period average, up from April’s estimate of 105%.

For June, rainfall is projected to exceed 108% of the national average. IMD also expects a brief slowdown in the monsoon’s northward progress after the first few days of June.

Mumbai has already experienced intense showers, and the forecast calls for more heavy to very heavy rainfall across Kerala, Karnataka, Maharashtra, and Goa until at least June 1. The monsoon is expected to spread into additional parts of Maharashtra, Telangana, Andhra Pradesh, and the North Bay of Bengal soon.

Threat to Inflation Gains

The Reserve Bank of India (RBI), which cut the repo rate to 6% in April 2025, had highlighted a decline in inflation driven by a strong rabi harvest and cooling global prices. In April, CPI inflation dropped to a six-year low of 3.16%, with food inflation down to 1.78%.

However, the early and intense rains are raising concerns that these inflationary gains could be short-lived.

Maharashtra Crop Damage Raises Alarm

Maharashtra, a key onion-producing state, has suffered severe agricultural losses. As of May 2025, crop damage has spread across 34,842 hectares, up from 31,889 hectares earlier. The affected districts include Amravati, Jalgaon, Buldhana, and Ahilyanagar.

In Nashik alone, more than 3,200 hectares have been impacted. Solapur and Pune have reported losses over 1,200 and 600 hectares respectively. Crops such as onions, bananas, mangoes, lemons, and various vegetables have been affected, with wind and waterlogging causing further harm.

Vegetables Could Drive Thali Inflation

Onions, tomatoes, and potatoes account for 37% of the cost of a vegetarian thali, according to CRISIL. In April 2025, a vegetarian thali cost ₹26.3, a 4% drop from the previous year. Any shock to the vegetable supply, however, could reverse this trend.

Heavy rains last October had already caused onion prices to rise by 46% and potatoes by 51%, pushing thali prices up by 20%.

Tomatoes had nearly doubled in price, from ₹29/kg to ₹64/kg, after similar weather-related disruptions in September 2024.

Prices Already on the Rise

As of May 20, 2025, onions at Lasalgaon—India’s largest wholesale market—were priced at ₹1,150 per quintal. With the current rains affecting storage and transport, prices are expected to rise.

Tomato prices in Pune’s wholesale markets have surged from ₹5/kg to ₹20–₹25, with supply volumes falling sharply. APMC officials reported a 50% drop in vegetable arrivals as farmers struggle to harvest and ship their produce.

Conclusion

While the early arrival of the monsoon may offer a break from the heat, it also brings challenges that could push up food prices and disrupt economic stability. As rains continue, close monitoring of crop damage and inflation trends will be crucial for policymakers and consumers alike.

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