Rising tensions and conflict in the Middle East, particularly around the Strait of Hormuz, have disrupted energy supplies, significantly increasing global food costs.

Attacks on vessels and broader regional instability are pushing up fuel, chemical fertiliser and shipping costs—pressures that are already being passed on to consumers.

Although Nepal imports most of its food from India and edible oil from Southeast Asia, the rise in the US dollar and transportation costs has also begun to affect Nepali consumers.

Nepal has not yet felt the full impact. However, as a country heavily dependent on imported food, fuel and fertilisers, analysts warn it is particularly vulnerable to global price shocks in the coming days.

Market analysts say the stronger dollar and higher transport costs are key drivers behind rising prices, but market anomalies are also emerging, with traders taking advantage of the situation to hike rates.

According to traders, the price of rice—particularly fine varieties imported from India—has increased by around Rs100 per sack. The price of edible oil, especially sunflower oil imported from Argentina, Malaysia and Ukraine, has jumped by Rs80 per litre, reaching as high as Rs300.

Nepal imported 76,120 tonnes of sunflower oil worth Rs11.99 billion in the first eight months of the current fiscal year. Of this, 56,908 tonnes worth Rs6.2 billion were re-exported to India.

Likewise, Nepal imported 508,850 tonnes of crude soybean worth Rs81.18 billion and re-exported 366,527 tonnes of processed soybean oil worth Rs75.77 billion to India.

Nepali households mainly consume sunflower and mustard oil.

According to the Department of Customs, Nepal imported 640,964 tonnes of crude soybean, palm and sunflower oil worth Rs101.71 billion during the review period. Re-exports of refined soybean, palm and sunflower oil reached 447,795 tonnes worth Rs86.87 billion.

Rice imports from India stood at 182,810 tonnes worth Rs14 billion, while paddy imports totalled 384,842 tonnes, also valued at Rs14 billion.

Devendra Bhakta Shrestha, president of the Nepal Wholesalers Association, said the rise in edible oil prices in Nepal is not directly linked to tensions in West Asia and the Middle East but rather to the appreciation of the dollar.

“The price of edible oil, especially soybean and sunflower oil, started rising even before the recent tensions,” he said. “Sunflower oil, which used to cost Rs200–220 per litre, now sells for Rs280 to Rs300.” He added that supply remains adequate and there is no shortage in the market.

However, the Association of Nepalese Rice, Oil and Pulses Industry disputes claims of a sharp rise in rice prices.

Rahul Agrawal, the association’s vice president, said rice prices have increased by only Rs10 to Rs25 per 25-kg sack. “Prices began rising about 20 days ago as consumers started hoarding rice. Since tensions in the Middle East escalated on February 28, there has been a trend of households buying two to three sacks at a time,” he said. He also cited higher transport fares as a contributing factor.

In the domestic market, the full impact of fuel price hikes has yet to be reflected. Traders say the government has not adjusted transportation or cargo fares accordingly.

On March 15, Nepal Oil Corporation increased petrol and diesel prices by Rs15 and Rs10 per litre, bringing them to Rs172 and Rs152 respectively.

Traders warn that once cargo fares are revised, the cost of most household goods could rise again.

Amul Kaji Tuladhar, general secretary of the Nepal Retailers Association, said the current price hike is not normal.

“New stock has not yet arrived—it takes about a month—but large wholesalers and manufacturers have already raised prices, especially for edible oil and rice,” he said. “Retailers are being forced to follow suit.”

Retailers say price gouging began after the announcement of the midterm election on March 5.

According to the Department of Supplies, the price of jeera masino rice rose by Rs18 per kg to Rs88 per kg ahead of the election. Flour prices increased by Rs18 per kg to Rs80, while lentils rose by Rs55 per kg to Rs185.

Consumer rights activists argue that there is no justification for the rise in essential food prices, as supply chains remain unaffected by the Middle East tensions.

“Opportunistic traders and manufacturers are creating artificial shortages, taking advantage of the interim government,” said Bishnu Prasad Timilsina, general secretary of the Forum for Protection of Consumer Rights-Nepal. “There is no reason to raise prices when supply has not been disrupted.”

He described the price hikes as unlawful and exploitative, accusing authorities of failing to enforce market regulation.

“The hike in edible oil prices began even before fuel prices rose. This is a direct exploitation of consumers,” Timilsina said, adding that the absence of price stability mechanisms and effective monitoring has allowed arbitrary hikes.

If tensions escalate further and fuel prices remain high, the consequences could extend far beyond Nepal.

An analysis by the World Food Programme warns that rising food and fuel costs, combined with supply chain disruptions, could push an additional 45 million people into acute hunger—bringing the global total to a record 363 million.