Clothes and footwear ‘major’ contributors to inflation in FY23
1 min read . Updated: 31 Jan 2023, 07:09 PM IST
Premium- During FY23, ‘food and beverages’, ‘clothing and footwear’, and ‘fuel and light’ were the major contributors to headline inflation—the first two contributing more this fiscal than in the previous one, according to the Economic Survey
NEW DELHI : Prices of clothes and footwear have risen consistently over the last three years with average annual retail inflation at 9.7% in FY23, according to the Economic Survey released Tuesday.
In fact, the category of clothing and footwear was among the major contributors of headline inflation in FY23, the survey said.
“During FY23, ‘food and beverages’, ‘clothing and footwear’, and ‘fuel and light’ were the major contributors to headline inflation—the first two contributing more this fiscal than in the previous one," according to the Economic Survey for 2022-23.
Average Annual Retail Inflation (based on consumer price index) for clothing and footwear as a category stood at 1.6% in FY20, it touched 3.4% in FY21 before more than doubling to 7.2%. In FY23, average annual retail inflation in clothing and footwear is 9.7%, according to the survey.
India’s inflation rate peaked in April 2022 at 7.8% before moderating to 5.7% in December 2022 on the back of good monsoons as well as government measures that ensured adequate food supply. In fact, the survey noted that due to the anticipated slowdown in advanced economies, inflation risks coming from global commodity prices are likely to be lower in FY24 than in FY23.
To be sure—among the key inputs used by apparel manufacturers, domestic prices of cotton almost doubled between April 2020 and May 2022, according to an August report by ratings agency Crisil. Despite some moderation since June 2022, they are expected to remain higher that what it was before the pandemic, it added.
In fact, the government waived customs duty on cotton imports from14 April 2022, until 30 September 2022, to benefit the textile industry and lower prices for consumers.
The sector was significantly impacted at the onset of the pandemic when mobility restrictions shuttered malls and markets. As a result, retailers were left with held-over inventory; meanwhile, fashion trends changed too prompting consumers to buy more casual clothing. However, with improved mobility, apparel and footwear retailers are now swiftly expanding their footprint.
Crisil Ratings expects large apparel retailers to grow at 25-30% this fiscal, compared to 10-15% by their small and mid-sized counterparts. This would be on a relatively lower base as the large ones, being predominantly situated in malls and high streets, were impacted more by the pandemic-related lockdowns.
