Early arrival of monsoons offers relief on rising prices

An early start to monsoon season leads to hopes of bumper crops for India's rice, sugar and wheat producers.

The start of the monsoon season is keenly awaited across India, with delays to the start of the rains having brought down governments in the past as farmers found themselves unable to make a living.

But the early arrival of the rains could be good news for an economy that has been hurt by surging food prices this year.

The south-west monsoon set in over Kerala on Sunday, "three days in advance to the normal onset on 1 June", the Indian Meteorological Department said.

Prices of Indian farm products have surged in the past year, leading to export bans on some items such as onions. India recorded a year-on-year increase of 8.55 per cent in food prices for last month, according to the commerce and industry ministry.

Food prices have soared in recent months, with the UN Food and Agriculture Organization's index of food prices reaching 236 points in February - their highest level since the index was created in 1990 - before settling slightly lower in April.

The potential for a larger harvest has also set speculation mounting that India's export restrictions, including long-standing bans on exports of non-basmati rice and wheat, could be eased.

"The government will probably wait to see how yields and production will turn out before they'll be able to export," said Erin FitzPatrick, a commodities analyst at Rabobank.

Rice, one of the world's major staple crops, has remained relatively stable in the face of large price increases for other commodities such as wheat, corn, coffee and tea.