Budget unlikely to tame ogre of steep price hike

KATHMANDU: Though the government has projected to keep the price hike at seven per cent, the idea seems unfeasible. For the new fiscal year, the price hike is estimated to remain at 13 per cent as the government has completely failed to curb it.

Food price inflation remains a serious concern across Nepal. According to figures recently released by Nepal Rastra Bank (NRB), the year-on year inflation for food and beverage was 16.5 per cent for May. A poor food availability situation in remote hill and mountain markets, caused largely by the recent winter drought, has resulted in significant price increase during June, said a report Market Watch jointly prepared by World Food Programme (WFP), Food Security Monitoring and Analysis System the Ministry of Agriculture and Cooperatives (MoAC), Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate of the the Federation of Nepalese Chamber of Commerce and Industries (FNCCI) and Consumer Interest Protection Forum (CIPF).

“This is particularly so in Mugu where reduced local food stocks and insufficient external supply have led to a five per cent rise in the price of cooking oil, 30 per cent rise in the price of rice and 50 per cent rise in the price of beans between May and June,” the report said adding that due to a poor winter crop harvest, the price of potato continues to increase across much of the country, up by 10 per cent compared to last month and up by 58 per cent since last year.

Even Kathmandu Valley is under serious threat of price rise. There has been a strong increase in vegetable prices in the past one month, and the comparison of prices a month back and the prices today shows a very noticeable difference.

The price of carrot in the last one month has shown a major difference. Then priced at Rs 36.80 per kg it is now at a high at Rs 67.50, a difference of 155 per cent.

The widely consumed cauliflower has shown a difference of 104.74 per cent, priced at Rs 23 per kg a month back it is selling for Rs 47 per kg.

“The vegetable and grain yield this year has been very dissatisfactory due to meagre rainfall and various other factors. The price hike is due to lack of supply,” said Binay Shrestha, Planning Officer of the Kalimati Fruit and Vegetable Association.

Broccoli shows a difference of 141.33 per cent, priced at Rs 38 per kg it a month ago it has now gone up to Rs 92 per kg.

The price of watermelon in the peak season has touched Rs. 47.50 per kg. It was at Rs 13.67 exactly a month back, showing a difference of 247.48 per cent.

With the implementation of the proposed budget, the government has estimated the Gross Domestic Product at 5.5 per cent by the end of the coming fiscal year. The growth rate in agriculture sector is expected to be at 3.3 per cent and non-agriculture sector at 6.6 per cent. The projection is based on the surmise that the price level will gradually drop and inflation will be around seven per cent.

Looking at comparative data for only a month, the estimated rate of inflation does not seem to be a realistic or practical approach to curbing the price hike.