Business & Economy

Record inflation in Nepal sparks fears of rising poverty

Kathmandu, Jul 12 (EFE).- Sujata Sharma, who runs a cosmetic shop, has seen her expenses double while her business suffered a decline because of high inflation in Nepal, which in June recorded the highest price increase in the last six years.

“My kitchen expenses have more than doubled this year,” Sharma, a resident of the town of Bhaktapur in the Kathmandu Valley near the Nepalese capital, told EFE Tuesday.

“”Apart from the kitchen expenses, children’s school fees and transportation fares have increased sharply (…), everything is expensive,” she said, adding that business is no longer going as well as before.

Inflation stood at 8.56 percent in June compared to 4.19 percent during the same period last year, the Nepal Rastra Bank, NRB or the central bank, revealed Monday.

Prices of cooking oil and clarified butter increased by 22.6 percent, while food items such as meat and eggs increased by 11.22 percent and pulses by 9.13 percent.

According to the latest data by the NRB, the transport cost rose 25.7 percent, while economists say inflation will continue to rise and even reach double digits in July, the last month of fiscal year 2021-22.

The state-owned Nepal Oil Corporation also increased the price of petrol by 40.3 percent and diesel by 53.5 percent compared to June last year.

“From January onwards, energy prices have been going up and up,” observed economist Dadhi Adhikari during an interaction with EFE.

“Initially, prices were driven up by bottle necked supply chains and then robust consumer demand immediately after the Covid cases started to recede. It began to increase more when Russia invaded Ukraine in late February,” he added.

Adhikari said rising prices put many Nepalis at risk of falling back into poverty, undoing the strides made by the Himalayan country in recent decades.

According to a joint report by the Oxford Poverty and Human Development Initiative and Nepal’s Central Bureau of Statistics, the Asian country reduced its Multidimensional Poverty Index from 30.1 percent in 2014 to 17.4 percent in 2019. EFE


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