Price inflation in Nepal

 Srijana Rai

27April2022

Nepal doesn't boast strong economic ties to either Russia or Ukraine, but the war between those two countries has battered the Himalayan nation's already feeble economy. Skyrocketing fuel and food prices brought on by the conflict are hitting Nepal's economy, which has already been weakened by a pandemic-induced loss of tourism, a fall in remittances, a widening trade deficit and depletion of foreign exchange reserves.

Nepal is a nation of 29 million people, enclosed between giants China and India, relies solely on imports to meet its fuel needs. With the rise in global crude prices following Russia's Ukraine invasion, the state-owned oil monopoly, Nepal Oil Corporation, has been forced to hike prices of petroleum products. Prices of other commodities like food stuffs, soybeans and palm oil as well as iron, have also surged, making life much tougher for many Nepali people.Nepal is the fifth-most remittance-dependent economy in the world, with estimates suggesting that there are about three to four million Nepali migrants employed across the globe.

In a process to save the foreign currency reserves, authorities this month imposed restrictions on imports of luxury goods like cars, gold and cosmetics. But the effectiveness of the move in the long run is concerning.