Rising inflation, Covid-19 makes people more vulnerable in Nepal

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Many families in Nepal are struggling due to reduced job opportunities and rising inflation amid the Covid-19 pandemic, which continues unabated and has increased the number of cases by a day to over 10,000 in the past few days.

Monthly consumer price inflation rose to 7.11% in December 2021, the highest in 64 months, from 5.32% in November, according to data from the country’s central bank.

As a result, edible oil and ghee prices increased year-on-year by 28.52%, followed by pulses and pulses at 11.79% and tobacco products at 11.74% , reports the Xinhua news agency.

In terms of the wholesale price index, wood and wood products saw the highest price increase at 26.35%, followed by fuel and electricity at 22.27% and building materials at 19.34%.

Experts said the rise in inflation was badly affecting people’s lives in general at a time when they were suffering from unemployment and less income.

“The biggest impact of rising inflation is felt on daily wage earners and those on fixed incomes,” said Prakash Kumar Shrestha, head of the economic research department at the central bank.

“As inflation contributes to a decline in people’s purchasing power, it has affected the livelihoods of many oppressed people.”

Experts have blamed Nepal’s rising inflation on supply chain disruptions, high oil prices, rising transport rates and shipping costs.

The South Asian country relies heavily on imported goods, especially those from neighboring India.

Nepal’s imports reached NPR 838.4 billion ($7 billion) in the first five months of the current financial year which started in mid-July last year and about 60% came from l India, according to central bank figures.

For the past fiscal year, average annualized inflation was 3.6%, which was lower “due to demand suppression due to shutdowns, which led to markets closing,” Shrestha said.

Experts said they expect inflation to pick up in the coming months after the country further hiked oil product prices last week, and a possible depreciation of the Nepalese currency against to the dollar could also contribute to the increase in the prices of imported products. goods.

In November last year, the central bank’s inflation expectations survey showed that most people expected average prices of goods and services to rise 11.3% year on year. .

“One factor that could contribute to a further rise in inflation in the coming days is the prospect of elections in 2022,” said economics specialist Puspa Lal Shakya.

“Political parties and their candidates will spend a lot to win elections, creating more demand for goods and services and contributing to higher inflation.”

Nepal will hold local, provincial and federal elections in 2022.

Experts, however, have not ruled out the possibility of inflation being brought under control due to lower demands for a possible lockdown and more restrictive measures to control the spread of the coronavirus.

–IANS

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(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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