Nepali consumers are being hit on two fronts as global inflation caused by higher shipping and fuel costs are making imports dearer; and at the same time, domestic market prices are going up due to weak government oversight and intervention in the market, consumer rights activists said.

According to Prem Lal Maharjan, president of the National Consumer Forum, prices of food items have jumped by around 40 percent in the last four months, and this is mainly due to artificial price hikes.

The cost of ghee and oil has swelled by 31.68 percent year-on-year in the first three months of the current fiscal year, says a Nepal Rastra Bank report. The price of meat and fish has increased by 11.93 percent while pulses and legumes have become costlier by 10.71 percent compared to last year.

The price of cereal grains and their products has increased by 2.17 percent in the review period, and the price of fruits has risen by 6.20 percent, the central bank said. The price of milk products and eggs has risen by 3.41 percent while sugar and sugar products have become dearer by 4.58 percent.

“This is an artificial price hike as there are no demand and supply constraints, and no natural disasters have occurred,” said Madhav Timalsina, president of the Consumer Rights Investigation Forum.

The general convention season is on with major political parties holding mass gatherings of their members which has led to price increases in the market. These jamborees are held with funding by industrial entrepreneurs and traders, and they have passed on their expenses to the Nepali consumer, he said.

The Gandaki Election Committee of the Nepali Congress has set the registration fee for a candidate for the provincial committee chair at a whopping Rs91,000 during the voting held on Friday in preparation for the ruling party’s upcoming general convention.

The recent conventions of the parties suggest that the increasing cost of engaging in internal politics could make national politics highly expensive.

A study carried out by the Election Observation Committee, Nepal showed that the government, political parties and candidates spent an estimated Rs131.63 billion in total during the 2017 elections.

“And the costs of campaigning are taken out of the consumer's pocket by hiking the prices of goods and services,” Timalsina said.

At the same time, traders are having a free hand in setting market prices because the Ministry of Industry, Commerce and Supply has been headless for more than five months now,” Timalsina added.

"Political events and lack of government presence have become a bonanza for traders who are fixing the prices of goods and services on their own," he said.

The hike in shipping charges and fuel prices has definitely increased the market price globally, but the way prices of goods and services have increased in the market, it can be said that this is due to artificial price hikes, he said.

Consumer rights activists say that the government should conduct an in-depth study to find out by what percentage shipping charges have increased, and how much traders are actually paying as freight.

Bishnu Prasad Timilsina, general secretary of the Forum for Consumers’ Rights, Nepal, said a study needed to be conducted to find out whether the high costs are a result of an artificial price hike or real inflation.

“We do not have any law except the Black-marketing and Some Other Social Offenses and Punishment Act 1975 that has capped the profit margin on the sale of goods and services at 20 percent. To ensure effective implementation of this law, the government should conduct efficient market monitoring," he added.

The Department of Commerce, Supply and Consumer Protection collected Rs23.98 million in fines for unfair business practices after inspecting 2,974 commercial firms in the last fiscal year 2020-21.

The department also destroyed shoddy goods worth Rs37.38 million in the fiscal year. Among the commercial firms that the department checked, it sealed and stopped the transactions of 38 firms while 19 people were taken under control for further investigation.

"There is no policy regarding consumer prices in the country," Timalsina said, adding that there was no price monitoring at the source such as the customs or the factory which frees merchants to charge anything.

“The government has little interest in consumer prices, and it seems they are on the side of traders—allowing them to cheat consumers price-wise, quality-wise and quantity-wise,” said Timilsina of the Forum for Consumers’ Rights, Nepal.

"It's a seller's market. People are forced to pay whatever the sellers charge on goods and services; and the market price varies from one shop to another," he said.

Dhaneshwor Poudel, assistant spokesperson for the department, rejected the charges of consumer rights activists regarding artificial price hikes on goods and services.

"Our market inspection shows that the current price hike in the market is caused by normal inflation, and there is no artificial price hike," he said, adding that the department was conducting market inspection 365 days of the year.

“The department does not conduct market inspection if prices have increased in a reasonable way or due to external factors,” Poudel said.

“We are dependent on imported goods as there is little domestic production, and price hikes in the international market impact prices here,” he said.