It’s not only tomatoes and vegetables that have caused an increase in the daily grocery expenses for households; the cost of the daily fruit assortment has also surged. Fruits, which accounted for 0.3 percentage points of the food inflation in FY23, might contribute even more this year due to anticipated price hikes surpassing previous estimates, as suggested by experts.
In August, the retail cost of apples escalated by 15%, reaching INR 175.63 per kg, a notable increase from the May average of INR 158.2 per kg.
“Late arrival of monsoon and heavy monsoon rains have impacted crops, leading to higher prices. The impact of fruits could be 0.4-0.5 percentage points or even higher this year,” said Madan Sabnavis, Chief Economist, Bank of Baroda.
While the impact of a strong base effect is anticipated to maintain low inflation, experts highlight the potential for an increase in fruit inflation during the latter part of the year.
“There is a high base effect, which will keep fruit inflation low in the near term. It could rise to 5% as the winter season arrives in December 2023,” said Paras Jasrai, Senior Analyst, India Ratings and Research.
Within the retail inflation basket, fruits (excluding nuts) make up 2.26% of the total, with apples contributing a quarter of this portion. Apples have experienced a significant surge in prices.
In June, fruit prices experienced a 1.3% increase, a notable jump from the 0.5% growth observed in the preceding month, with apple prices specifically surging by 6.3%.
Fruit prices are expected to increase further. “On a CPI-weighted basis, fruit prices were higher by 5.0% MoM in July,” said Gaura Sengupta, India Economist, IDFC First Bank.
Information sourced from the National Horticulture Board indicates that there was a sequential increase of 12% in apple prices during July.
According to experts, retail inflation is projected to surpass 6% in July due to escalating food costs and is anticipated to maintain its high level throughout August. Notably, tomato prices have surged by a factor of 5.8, averaging INR 137.35 in August, a significant increase from the May average of INR 23.61.