El Nino May Hit Food Inflation, But Rural Demand Has Buffers: Elara

Garima Kapoor, Deputy Head of Research and Economist, Elara Securities says uneven rainfall and a worsening El Nino could push up food inflation, with pulses, oilseeds and perishables likely to remain key pressure points. However, higher wheat stocks and rising crop prices could cushion the impact on basic foodgrains and rural incomes.

Kapoor says non-farm rural income and cash-transfer schemes are additional buffers for demand, making the current risk different from a decade ago. She expects state finances to remain under pressure, while food inflation could keep headline CPI near 6% through much of the fourth quarter.