Consumer price rise in Nepal tops global trendAdvocates of consumer rights have urged the government to cancel the 40 percent import duty imposed on sugar.
Whenever prices of daily essentials increase in the local market, traders always have a readymade answer to justify the upsurge: Prices are rising globally.
But a study conducted by a consumer rights body claims that this recurrent reason doesn't hold water.
The analysts who studied the price movements of various commodities in the local and international markets reported that price increases locally were disproportionately higher than global increases.
Nepali consumers have been undergoing prolonged hardship with daily essentials becoming more expensive all the time while incomes have stagnated. Householders are having a difficult time putting food on the table, and all they hear is that prices have increased across the seven seas, observers said.
In an effort to do something about it, the National Consumer Forum on Monday submitted a report to the Industry, Home, Finance, Agriculture and Labour ministries
recommending ways to make essential goods available at fair prices.
The consumer rights body has urged the government to remain vigilant as Nepal could suffer severe food insecurity that may push tens of thousands of people into poverty.
The report states that the elevated inflation is not entirely due to supply disruptions caused by the Covid pandemic and Russia's invasion of Ukraine; it is because traders have exploited the situation.
Nepal's agriculture sector is suffering from a myriad of problems which has led experts to forecast that food production, particularly rice, may fall this year.
On July 20, India imposed a ban on the export of non-basmati rice that has exerted further pressure on food supply. Following the Indian embargo, the price of rice in Kathmandu jumped by Rs200 to Rs300 per bag within a week, the forum said in its report.
As a result of less rainfall during the monsoon in Nepal and other Asian countries and growing rice consumption, chances are high that there will be a rice shortage and prices will go up, it said.
Apart from rice, prices of other commodities have increased sharply too.
The government has increased the customs duty on sugar to 40 percent. India has banned the export of sugar. “The price of sugar has increased to Rs105 per kg from Rs33 per kg within four years,” the forum said.
Edible oil has become costlier by Rs40 to Rs50 per litre in recent days for no apparent reason.
“Consumers are suffering because of abnormal and artificial price hikes in essential goods. This is basically due to faulty supply policy, lack of price analysis and weak monitoring and distribution mechanism of the government,” said Prem Lal Maharjan, president of the National Consumer Forum.
According to the report, the price of lentils has increased by Rs30 per kg, flour by Rs60 per kg and cumin by Rs1,000 per kg in the market.
"It is the responsibility of the government to control prices of daily essential goods to make life easier for the people," Maharjan said.
Salt, rice, lentils, edible oil, sugar and beaten rice are the major food items listed as essential goods by the government.
Consumer rights activists have urged Industry Minister Ramesh Rijal to cancel the 40 percent import duty on sugar.
They have also suggested importing 100,000 tonnes of sugar through Salt Trading Corporation and Food Management and Trading Company at zero customs duty and selling it at the international price.
Considering the country’s rice requirement, the government should make provisions to import rice from India and other countries through government corporations and manage the distribution at the international price, the rights body has suggested.
The forum has also stated that the price of edible oil should be fixed by the government because Nepali importers import crude oil at a cheap rate but sell it at a high price in the local market.
With the decline in domestic wheat production and India imposing a ban on wheat shipments, government-owned corporations should be given the responsibility to manage supply, it said. The customs duty should be brought down to zero to make wheat affordable to consumers.
The forum said that sugarcane and paddy produced in Nepal were being smuggled to India in large quantities. It has suggested providing a reasonable value for the crops to farmers.
“Domestic farm production is declining, and the country is now dependent on imports,” said Bishnu Prasad Timilsina, general secretary of the Forum for Protection of Consumer Rights Nepal.
“It’s unfortunate that the government has no proper planning to tackle the emerging food crisis,” he said.
"The purchasing capacity of Nepali consumers has been falling continuously and the high prices of essential food has forced consumers to cut down on their health and education spending," said Timilsina.
“Nepal’s supply mechanism is in the hands of middlemen, and consumers are not feeling the presence of the government,” said Timilsina.
According to Nepal Rastra Bank, the year-on-year consumer price inflation increased to 6.83 percent in mid-June 2023 compared to 8.56 percent a year ago. Food and beverage inflation stood at 5.66 percent while non-food and service inflation rose to 7.76 percent in the review month.
Under the food and beverage category, the year-on-year inflation of the spices sub-category increased by 35.29 percent, restaurant and hotel by 14.36 percent, cereal grains and their products by 13.06 percent, and milk products and eggs by 10.98 percent, the central bank said.