Weather-hit veggies and fruit put food inflation on the boil in FY25

From coconuts and garlic to potatoes and onions, soaring fruit and vegetable prices in FY25 drove up household grocery bills, accounting for over half of last year's food inflation, as extreme weather disrupted supplies.

Vegetables alone contributed 43.7% to the food inflation basket in FY25, up from 30.8% in FY24, while the share of fruits rose to 8.3% from 5.1%, according to an ET analysis.

Their high contribution meant food inflation eased only marginally to 7.3% in FY25 from 7.5% in FY24, even as overall inflation dropped more - to 4.6% from 5.4% - during this period.

"Climate change affected supplies in FY25, especially for vegetables and fruits, due to erratic rainfall patterns," said Paras Jasrai, associate director at India Ratings and Research (Ind-Ra).

Madan Sabnavis, chief economist at Bank of Baroda, pointed out that fruits and vegetables are sensitive to adverse weather conditions like extreme heat and heavy rainfall.

Vegetable inflation averaged 19.4% in FY25 compared to 14.9% in FY24. Among vegetables, garlic recorded the highest 55.4% inflation in FY25, followed by potato (53.3%), onion (37.4%), and lemon (21.2%). Tomato inflation was at 18.8%.

Among fruits, coconut saw the sharpest increase of 21.4%, followed by pineapple (13.5%), guava (13.3%), and green coconut (12.2%).

"The sporadic nature of rain impacted the southern region, which is a key producing area for coconut," Jasrai said.

Sabnavis pointed out that transportation costs also increased last fiscal, adding to inflation, "not due to fuel prices, but due to overall logistics cost increases."

Cereals and products were the second largest contributor to food inflation at 23.7% in FY25, though this was down from 33.3% in FY24.

Out of 10 sub-groups in the consumer price food index, six recorded a decline in their contribution.

Notably, spices contribution dropped to -3.6% in FY25 from 18.4% in FY24; milk to 6.4% from 14.4%; and pulses to 7.2% from 12%.

In contrast, oils and fats saw a rebound. Despite deflation trends, their contribution climbed to 5.9% in FY25 from -19.8% in FY24.

Sabnavis attributed this to international price trends and rupee depreciation. "Global edible oil prices rose, and the rupee's 4-5% depreciation also played a role," he said.

Inflation in edible oil rose to 5.5% in FY25 from -14.8% in FY24.

Benign outlook

Jasrai expects the situation to improve as global commodities prices are easing, which will gradually have an impact on the overall oil and fats situation in FY26.

Last week, the Indian Meteorological Department (IMD) forecasted above-normal monsoon rainfall for 2025, a positive signal for the agriculture sector. "With a high base from FY25 and a favourable monsoon forecast, we anticipate some relief in food inflation in FY26," Jasrai said.


( Originally published on Apr 20, 2025 )