High fruit prices may push up food inflation further

It is not just tomatoes and vegetables that have fired up households’ daily grocery bills, the daily fruit platter has also become pricey. Fruits, which contributed 0.3 percentage points to food inflation in FY23, may end up adding more this year as prices are expected to be higher than earlier estimated, according to experts.

The retail price of apples was 15% higher in August at ₹175.63 per kg compared with ₹158.2 per kg average in May.

“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.

Although a high base effect is expected to keep inflation low, experts point out that fruit inflation could rise in the latter half 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.

Fruits (ex nuts) account for 2.26% of the retail inflation basket, of which a quarter is accounted for by apples, which have witnessed a sharp price increase.

While fruit prices were up 1.3% in June, compared with 0.5% in the previous month, apple prices rose 6.3% in June.

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.

Data from the National Horticulture Board shows that apple prices were up 12% sequentially in July.

Experts say retail inflation in July is expected to cross 6% due to rising food prices and will likely remain high in August. Tomato prices have jumped 5.8 times, averaging ₹137.35 in August compared to ₹23.61 in May.