Mumbai: Your relaxing tea may be heavy on your pocket in the coming days. According to a recent report, the pressure on tea companies on prices is increasing due to rising wages. The prices of tea may increase in the coming financial year. According to the report, the tea industry may face challenges arising out of wage growth and its impact on prices in the next financial year, as production has gone up to a normal level.
The rating agency ICRA has predicted the challenges for the tea industry by the year 2021-22 after a lot of improvement in performance during the year 2020-21 in the report. The rating agency said that the impact on wholesale tea prices will be an important aspect when production is normal in the new session, which will affect profitability in the coming financial year. West Bengal has recently announced a 15% increase in wage rates on an interim basis, which will increase the cost of production for wholesale tea companies.
The report says that there has been a significant increase in the prices of domestic tea in the current financial year, an average of 46% of north India auctions during April-December 2020 and an average of 41% higher in South India's tea auction. Due to a 10% decline in domestic production, tea prices saw a steep spurt, while consumption remained bullish.