Many families in Nepal are struggling due to reduced job opportunities and growing inflation amid the Covid-19 pandemic, which is still continuing unabated and has increased the single-day cases to more than 10,000 in the past few days.
The monthly consumer price inflation climbed to 7.11 percent in December 2021, the highest in 64 months, from 5.32 percent in November, according to data from the country’s central bank.
As a result, the prices of edible oil and ghee had surged year on year by 28.52 percent, followed by pulses and legumes at 11.79 percent, and tobacco products at 11.74 percent, reports Xinhua news agency.
In terms of the wholesale price index, wood and wood products saw the highest price rise of 26.35 percent, followed by fuel and power at 22.27 percent, and construction materials at 19.34 percent.
Experts have said that rising inflation has been affecting the lives of the general people badly at a time when they are suffering from unemployment and less income.
“The biggest impact of higher inflation is on the daily wage earners and those with fixed incomes,” said Prakash Kumar Shrestha, chief of the economic research department at the central bank.
“As inflation contributes to a fall in the purchasing power of people, it has affected the livelihoods of many downtrodden people.”
The experts have blamed the rising inflation in Nepal on supply chain disturbance, high petroleum prices, increasing transport fares, and shipping charges.
The South Asian country relies heavily on imported goods, particularly those from neighbouring India.
Nepal’s imports reached as high as 838.4 billion NPR ($7 billion) in the first five months of the current fiscal year that began in mid-July last year and around 60 percent were from India, according to the central bank figures.
For the last fiscal year, the average annualized inflation was 3.6 percent, which was lower “because of suppressed demands due to lockdowns, which led to the closure of markets”, said Shrestha.
Experts said that they were expecting the inflation to grow in the next few months after the country further increased the prices of petroleum products in the past week and that a possible depreciation of the Nepali currency against the dollar may also contribute to increasing prices of imported goods.
In November last year, the central bank’s inflation expectation survey showed that most people expected the average prices of goods and services to rise by a staggering 11.3 percent for a year.
“One factor that could contribute to further rise in inflation in the days to come is the proposed elections in 2022,” said Puspa Lal Shakya, an economics scholar.
“Political parties and their candidates shall spend heavily to win elections, creating more demands for goods and services and contributing to a rise in inflation.”
Nepal will hold local, provincial and federal elections in 2022.
Experts, however, have not ruled out the possibility of inflation being tamed due to a slump in demands over possible lockdown and more restrictive measures to control the spread of the coronavirus.