The unusually warm winter in North India this year poses a risk to the wheat crop, experts have warned, adding that this could once again fuel inflationary pressures.
India is the world’s second largest producer of wheat and wholesale prices of the staple already started climbing in January ahead of the new crop.
While the government remains hopeful of a good wheat harvest that would help keep prices in check, an unusually warm winter is posing a threat. The Indian Meteorological Department had predicted that most parts of India would experience above-normal temperatures and below-normal rainfall in February. A Western disturbance is, however, expected to hit the North and Northwest over the next few days and that could help the wheat crop.
Paras Jasrai, Senior Economic Analyst at India Ratings and Research, noted that rising temperatures have added to the uncertainty to the global economic environment which is at the cusp of new tariff wars. “January 2025 recorded higher-than-normal temperatures, if the prevailing temperature in February (which has been higher than normal) continues till March 2025 then it will have an adverse impact on rabi crop production which can slowdown the easing of food inflation. So rising trend in wheat prices is a key monitorable,” he said on the January wholesale inflation data.
WPI inflation in January 2025 eased to 2.31% from 2.37% in March with food prices inching down. Wholesale inflation in the food index was at a five-month low of 7.47% last month. However, wholesale inflation in wheat has started picking up and was at 9.8% in January, which is a near two-year high. On a month-on-month basis, wheat inflation picked up by 1.76%.
Quant Eco Research also noted that after a dry and warm January, the IMD predicts similar conditions to prevail in February, with both maximum and minimum temperatures likely to be above normal over most parts of the country. “If this trend persists in March, then it could have an adverse impact on crops like wheat, mustard, chickpea, apple,” it warned. In Jan-25, the average rainfall was 72% less than normal, while the average mean temperature was third highest since 1901.
For now, retail inflation as measured by the consumer price index remains on the easing trajectory and came in at 4.31% in January from 5.22% in December 2022 with analysts expecting it to decline further to about 4% in the coming months. Retail inflation in cereals and products stood at 6.24% from 6.51% in December 2024.