Food shortages are likely to increase inflation in India in the near future

MUMBAI: While people are worried about the rising prices of food items, the main problem is not only tomatoes but other items as well. There is a shortage of food grains in India, which may increase prices and increase inflation in the country. However, vegetable prices are expected to improve in the coming months, HSBC Holdings said.

HSBC has estimated that inflation will remain at 5% until March 2024. If there is a sharp rise in foodgrain prices, inflation may increase. Economists are closely monitoring rainfall and other crop data, including rice, in the coming weeks to better understand the situation.

The rice crop has not been planted well in northwest India and the south and east of the country have not received enough rainfall. This could create problems for India's rice exports, as India is the world's largest rice exporter.

Also, if rice production is affected, it could lead to higher prices for wheat, which is used as a substitute for rice in some cases. This could have an impact on food prices globally. People are especially worried about grains like rice and wheat, as their shortages can drive up prices.

There are several other reasons behind the rise in foodgrain prices in India. Wheat prices rose last week after Russia warned that ships bound for Ukrainian ports in the Black Sea were carrying weapons. Besides, El Nino can also affect and increase the prices of food grains.

Food grains significantly determine the cost of living of people in India. Wheat is a basic and essential part of the Indian diet. Retail inflation touched a three-month high of 4.81 percent in June on the back of a recent rise in prices of food items, including wheat. This has led economists to predict that prices will continue to rise during the rest of the year.