Why Did Food Inflation Turn Negative in 2025 and Can It Last?
- Gabriela Galeena
- Jan 9
- 3 min read
Food inflation remained a key economic concern in 2025, particularly in India, where food accounts for a large share of household expenditure. After periods of sharp volatility in earlier years, 2025 stood out as a year of gradual normalisation. This moderation was driven largely by strong agricultural output, comfortable buffer stocks, favourable weather conditions, and policy measures aimed at stabilising both supply and prices.
Supply Recovery
One of the most important factors behind easing food inflation was the improvement in agricultural output and availability. Production of rice, wheat, pulses, and other cereals rose sharply in the 2024–25 season, ensuring ample foodgrain supply through most of 2025. Fruits and vegetables production also increased, supported by surplus monsoon rainfall and continued fertiliser support. At the same time, the total area under cultivation expanded, reflecting better land utilisation and improved farmer participation.
Stock Comfort
Food Corporation of India (FCI) data highlighted the strength of the supply position. As of October 1, 2025, total food grain stocks in the central pool stood at 676.43 lakh tonnes, around 128 lakh tonnes higher than the same period last year. Rice stocks alone were 356.1 lakh tonnes, significantly higher than 310.59 lakh tonnes in October 2024 and 221.87 lakh tonnes in 2023. Importantly, rice stocks were about 150.9 lakh tonnes above the buffer norm, giving policymakers ample flexibility to manage markets and prevent price spikes.
Price Correction
These supply-side gains were clearly reflected in price trends. Food inflation, which had peaked at 10.87% in October 2024, steadily softened during 2025. By October 2025, food inflation had fallen to -5.02%, the lowest level recorded in more than a decade. In November 2025, food prices were down 3.91% year-on-year, underscoring the depth of the correction.
Vegetable Relief
According to the CRISIL reports, vegetables were the main driver of the decline in food prices. Potato prices fell 31% due to large-scale stock releases by cold storage units. Tomato prices declined 8% year-on-year on the back of higher supplies. Onion prices recorded a sharp 46% year-on-year decline, supported by increased rabi arrivals and higher domestic availability, along with weaker export momentum to Bangladesh, which accounts for about 40% of India’s onion export basket. These declines provided meaningful relief to households and significantly eased pressure on food budgets.
Pulse Prices
Prices of pulses also moderated during the year. According to CRISIL, pulse prices declined by 16%, driven by increased imports of Bengal gram, yellow pea, and black gram. The government’s decision to allow these imports until March 2026 helped ease domestic supply pressures and stabilise prices for consumers.
Cereal Stability
Cereal prices, in contrast, remained largely stable throughout the year. Strong procurement operations and ample public stocks played a crucial role in anchoring expectations. Comfortable rice inventories and improved wheat sowing helped prevent volatility, ensuring steady prices even as other food categories saw sharp corrections.
Rabi Momentum
The outlook was further strengthened by a robust Rabi sowing season. As of November 21, 2025, total rabi sown area reached 306.31 lakh hectares, significantly higher than 272.78 lakh hectares during the same period last year. The increase reflected favourable soil moisture, improved field conditions, timely market signals, and proactive government advisories, pointing to strong production prospects for the coming months.
Input Pressures
Input costs remained a mixed factor. India continued to depend heavily on global markets for fertilisers such as urea, DAP, and complex nutrients, exposing agriculture to global price and currency risks. However, higher subsidy outlays absorbed much of the cost pressure, preventing these input costs from feeding into higher retail food prices.
Trade Support
Trade policy also contributed to price stability. The extension of free trade arrangements with Myanmar, Mozambique, and Malawi helped ensure steady imports of pulses and other essential commodities. These agreements reduced vulnerability to domestic supply shocks and supported price stability in historically volatile segments.
Future Outlook
Looking ahead, the outlook for food inflation remains relatively benign. Large buffer stocks, strong Rabi sowing, and comfortable supply conditions suggest that food inflation is likely to remain range-bound in 2026, although modest upward pressures cannot be ruled out, states The Financial Express. Food inflation in 2025 shifted from being a major macroeconomic risk to a stabilising force within India’s inflation framework. Strong harvests, expanded acreage, surplus stocks, favourable weather, targeted subsidies, and supportive trade policies worked together to keep food prices under control. While challenges such as climate variability and import dependence persist, 2025 demonstrated how coordinated supply-side management can effectively contain food inflation and protect consumer purchasing power.
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