After a comfortable couple of years or so, inflation in India is heading towards what can only be a case of Murphy’s Law. Following two years of bountiful rains, the country is forecast to receive below average rainfall in 2026, with the India Meteorological Department (IMD) saying earlier this week that the monsoon is seen at 92% of the Long Period Average (LPA).Should the monsoon indeed turn out to be lower-than-average, it will be another upside risk to inflation, with the war in West Asia already beginning to have an impact despite the government’s best efforts. Data released Monday showed India’s headline retail inflation rate rose to 3.4% in March. While this was only slightly higher than February’s 3.21%, some components of the Consumer Price Index (CPI) are beginning to crack under the weight of the US and Israel’s war against Iran: inflation for ‘LPG cylinder and piped natural gas’ rose to 5.3% from 1.6% in February, while airfares jumped 14.2% after having dropped 7% in February.While the war is impacting energy prices, a weak monsoon could raise overall prices through the food route.On April 8, the Reserve Bank of India (RBI) said it expects CPI inflation to average 4.6% in 2026-27, more than double the price rise seen last year. Underpinning this forecast was the assumption of a normal monsoon in 2026-27 and 2027-28. Just a week later, this key assumption already requires a rethink.To be sure, the relationship between rainfall and agricultural production – and therefore, food inflation – is mixed; there have been instances of years with good rainfall witnessing high inflation and vice versa.Also Read | IMD forecasts heatwave in northwest, central and south India up to April 20“Also, the buffer situation of the foodgrains looks sufficient to thwart any untoward disruption on Kharif production front, if it be so. As a solace, food production too has apparently little co-relation with rainfall pattern, even the years with lower than LPA rains witnessing good output,” Soumya Kanti Ghosh, State Bank of India’s Group Chief Economic Adviser, said in a note on Monday. What matters, Ghosh said, is how much it rains in the major crop-producing regions of the country – or, spatial distribution – and when it rains, or temporal distribution, in terms of the sowing period and when crops are growing. Forecasts for spatial and temporal distribution will be made by IMD in May.However, poor rainfall can impact agricultural production through a different route. According to ratings agency ICRA, a below-normal monsoon forecast “does not augur well for replenishment of reservoir storage level”. Data from the Central Water Commission shows that as on April 9, the all-India reservoir storage stood at 44.7% of live capacity at full reservoir levels, 18% higher than a year ago and 27% more than normal storage levels.Story continues below this ad“Reservoir levels typically exhibit a seasonal pre-monsoon (March-May) drawdown, followed by Southwest Monsoon-led replenishment during June-September. Consequently, a below-normal rainfall expectation for the year, is likely to limit the reservoir replenishment,” ICRA noted.Of course, the IMD can get its forecast wrong. In April 2022, it had predicted the monsoon to be 99% of the LPA, only for actual rainfall to be 106%. Something similar happened in 2019 and 2020. At the same time, IMD’s forecast of 92% is the lowest in 25 years.Farm output impactWater stored in reservoirs around the country would prove to be particularly crucial for irrigation if the El Nino phenomenon hits rainfall. According to ICRA, on the eight occasions in the last 24 years that India has witnessed El Nino conditions, the monsoon has been 1-22% lower than the LPA. This led to a fall in the kharif output by as little as 1.6% in 2006 and as much as 23.3% in 2002. “Moreover, rabi output contracted in four of such eight years, including in 2002 (-13.7%), 2009 (-2.3%), 2014 (-9.7%) and 2018 (-0.3%),” ICRA said.Should agricultural output be adversely affected due to sub-par rains, it would hit farm incomes. In conjunction with higher food inflation, this could pose a problem for the rural economy, which has done well over the last two years due to the good monsoon.War and rainStory continues below this adWhat happens to inflation when war and weak rain strike together? As per HSBC economists, if the El Nino is moderate, CPI inflation may end up higher than the RBI’s 6% upper tolerance limit if Brent oil prices average $100 per barrel in 2026-27. In the case of an extreme El Nino, average inflation this year may exceed 6% at $90/bbl Brent prices.“Brent averaged $100/bbl in March and suggests a crossroads. Whether the price dips below $100/bbl or remains well above over the next month could determine whether or not the repo rate is increased,” HSBC economists led by Pranjul Bhandari said in a note on April 2.