Gopal Sharma

KATHMANDU, Reuters – Nepal saw its annual inflation rise to a high of nearly six years in April. This was just as it began to recover the lost tourism dollars due to the coronavirus epidemic.

According to data from Nepal Rastra Bank, annual consumer price-based inflation increased by 7.28% from 7.14% in the preceding month and 3.10% from one year ago.

Prices for edible oils rose 28.36% and then prices for milk products, eggs, pulses increased 11.56% from a previous year – more than double the rate of food inflation at 7.4% in a single year, data revealed.

Nepal, a country bordered by India and China, banned the import of luxury goods from mid-July. Instead, it switched to a weekend for fuel consumption to reduce its dependence on foreign currency reserves.

Prakash Kumar Shrestha (head of NRB’s Economic Research Department), stated that inflation is partially driven by global factors and added that maintaining foreign reserves was “a challenge”.

NRB stated that the forex reserves decreased 18.2% from mid July to $9.61 Billion as of mid April. That is sufficient to cover imports for approximately six months.

Since mid-July 2021 the rupee has fallen by more than 2% against USD, which makes imports more expensive.

Inflation is a big headache for Prime Minister Sher Bahadur Deuba’s government which faces a national election by the end of the year.

The sky-high price of, coal, and edible oils following Russia’s invasion in Ukraine has harmed the economy that had been slowly recovering from lost tourist dollars.

Saila Tamang, a worker in Kathmandu, stated that “the cost of food such as rice, fruits, and cooking oils have soared tremendously over the past months.” It has been very difficult for the common person to survive.