Coconut Inflation Goes Nuts: Social media trends, roaring exports send prices soaring

Coconut is getting more expensive as exports rise

A surge in exports and shifting consumer preferences—fuelled in part by social media and festival/religious use—have driven coconut prices to a seven-year high in January, an analysis released by the government showed.

Coconut prices rose 38.7 percent in January from a year earlier, following a 33.8 percent rise in December. Green coconut prices rose 14.4 percent in January after increasing 12.3 percent in the preceding month. Inflation in green coconut prices has remained in double digits since April.

Rising exports and shifting consumer preferences, amplified by social media influencers, are driving up coconut prices. The supply constraints haven't helped.

"Supply shocks in Tamil Nadu are contributing to higher inflation. Also, January was the festive season in the southern region. So a combination of both led to elevated inflation for coconuts," said Paras Jasrai, senior analyst, India Ratings and Research.

Coconut oil, in particular, has gained popularity due to its perceived health benefits, such as antimicrobial properties and fat burning qualities.

In the first eight months of the fiscal year, desiccated coconut exports increased 300 percent to $9.6 million, while fresh coconut exports increased 12.7 percent to $16.4 million.

Coconut oil demand is also seeing soaring demand, with crude coconut oil exports doubling from a year earlier in the eight months to  November 2024, while refined oil exports rose 20.5 percent.

A low base since January 2022 may also appear to be influencing inflation.

Coconut oil inflation touched a high of 54 percent in January, rising from 45.5 percent in the previous month and -1.7 percent in January 2024.

Another factor contributing to higher coconut oil inflation may be a demand substitution. After the government hiked the import duty on sunflower, soybean and palm oil.

Besides, the EU’s deforestation-free regulation, which affects the palm oil industry, may be pushing companies and people towards coconut oil as a substitute. Palm oil is a significant constituent in the toiletry industry for manufacturing soaps and creams.

Copra, the primary ingredient for extracting oil, has also seen a surge in demand. Copra exports were up 10 percent to $16.6 million.

Copra inflation was up 20.8 percent in January from 18.3 percent in December and 9.7 percent in September.

Fruits and oils inflation were the two major categories to witness a rise in January, while overall food inflation dipped to 6.4 percent in January from 8.4 percent in the previous month. India’s retail inflation declined to a five-month low of 4.31 percent in January.