Caterpillar

 is an item used as fishing bait.

Obtaining
The player can occasionally obtain Caterpillars as an additional item while gathering plants, such as Herbs and Snake Berries, off the ground in the wild.

can also be purchased at the following shop:

Fishing
is used as a fishing bait. When the player has any fishing rod in an active slot and Caterpillars in their Inventory they are able to fish at fishing spots.

Gift
can be given as a gift to other characters. It is a universally disliked gift.