High fruit prices may likely increase food inflation further in 2023

Fruits, which contributed around 0.3 percentage points to food inflation in FY23, may add more this year as prices are expected to be higher than earlier estimated.

The retail price of apples was 15 per cent higher in August at Rs 175.63 per kg, compared with Rs 158.2 per kg average in May, according to a report in The Economic Times (ET).

Madan Sabnavis, chief economist of the Bank of Baroda, said that the late arrival of monsoon and heavy monsoon rains have impacted crops, which led to higher prices.

"The impact of fruits could be 0.4-0.5 percentage points or even higher this year," said Sabnavis.

 

Paras Jasrai, senior analyst at the India Ratings and Research, a rating agency, said a high base effect will keep fruit inflation low in the near term.

"It could rise to 5 per cent as the winter season arrives in December," he said.

Fruits (ex nuts) account for 2.26 per cent of the retail inflation basket, of which a quarter is accounted for by apples, which have seen a sharp price increase, according to the ET report.

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

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

Experts said retail inflation in July is expected to surpass six per cent due to rising food prices and will remain high in August. 

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