Food prices unlikely to fall after last month's steep riseTraders say that prices will not go down in the short run with festivals around the corner.
Food prices rose sharply on heightened demand in August as people rushed out of their homes to stock up on groceries after the lockdown was lifted in the third week of July.
Panic buying preceded the stay-at-home order that was issued on March 24 and lasted for four months.
According to retailers, food prices jumped 10-20 percent year-on-year largely due to higher labour and production costs and disruption in the supply chain.
The traders say that food prices will not go down in the short run as the country’s major festivals like Dashain and Tihar are around the corner when food consumption swells due to the endless feasts.
After the global health crisis forced tens of thousands of restaurants across the country to close, food sales had plunged resulting in a steep fall in prices. But prices started to increase as soon as the lockdown was lifted with restaurants buying in bulk to serve diners.
According to consumer rights activists, opportunist traders are hiking prices in the absence of proper government monitoring. They said that market prices rose by around 10 percent, but retailers have been adding another 10 percent to their mark-up to make up for losses incurred during the long lockdown.
According to the comparative retail price report of the Department of Commerce, Supplies and Consumer Protection, prices of all food items like rice, flour, lentils, legumes, sugar, edible oil and beaten rice have gone up.
Raj Kumar Shrestha, president of the Nepal Retailers Association, said the Covid-19 pandemic had altered the market dynamics of the retail business, and it was obvious that prices would rise.
“The operation of retail stores was thrown into chaos after the lockdown was withdrawn as shops were allowed to open during certain time slots. There was a problem with transporting goods too,” he said.
Since the lockdown on March 24, labour charges have increased from Rs25 per quintal to Rs35 per quintal,” said Sanjay Phuyal, proprietor of Aasma Enterprises, a wholesale supplier of food items in Kathmandu.
Labour charges have also gone up in the factories and the cost of production has risen as food manufacturers have to follow health safety protocols, he said.
According to the department’s data, the price of mustard oil increased by Rs17 per litre to Rs177, soybean by Rs12 per litre to Rs152 and sunflower by Rs12 per litre to Rs162. “Edible oil has become dearer due to a rise in prices in the international market,” said Phuyal.
Prices of pulses and legumes have increased by Rs26 to Rs31 per kg within a year.
Dried peas cost Rs126 per kg compared to Rs95 per kg last year. Dried peas green that used to cost Rs80 per kg now cost Rs106 per kg. The price of sugar also has increased by Rs5 per kg to Rs85 per kg.
Lentils now cost Rs147 per kg, up from Rs110 per kg last year. The price of split red or pink lentils (musuro) has increased by Rs31 per kg to Rs121 per kg.
A separate comparative study done by the National Consumer Forum shows that prices of most food items like rice, lentils, legumes, edible oil and meat swelled by 15 to 20 percent within a year.
Prem Lal Maharjan, president of the forum, said that the price of a 25 kg bag of rice had increased by Rs150-200, lentils and legumes by 15-20 percent, edible oil by 15-20 percent and sugar by Rs30 per kg.
The price of rice had increased by 10 to 15 percent during the first nationwide lockdown with stocks running out due to panic buying, said traders.
Phuyal said that rice and flour prices had dropped after the lockdown was relaxed.
“Currently, sales of food items have contracted by 60 percent as people still remain indoors and their larders are full,” he said.
“Most of the people who have gone out of the valley have not returned, and people are also not buying much because they have less money,” he said.
Maharjan blamed the local governments for the huge fluctuation in retail food prices. It is the local units that are responsible for keeping the market well managed, competitive and disciplined during a crisis situation, he said. Except for a few local units, most of them have not conducted market inspection, he added.
“As daily consumable products come under the government categorisation of essential goods, the government can intervene in the market and control prices,” he said.