Lower and middle class families are more affected by price increases, as they are more likely to experience the cost of everything from food to travel. Price increases are also a matter of concern in Nepali society, where unemployment is high.
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One of the main reasons for the frustration of the common people is that their income cannot meet their expenses. As the source of income shrinks but expenses continue to increase, the situation of not being able to meet even basic needs is increasing.
The average inflation rate released by the Nepal Rastra Bank has also started increasing continuously, which shows that the prices of daily necessities of the common people have skyrocketed. Lower and middle class families are more affected by the inflation as they feel the cost of everything from cooking to travel. In Nepali society, where unemployment is high, inflation is also a matter of concern.
The NRB can play a supporting role in controlling price increases by influencing the flow of money. The government can control aspects such as black marketing, artificial price increases, and artificial shortages through administrative measures. On the other hand, the legitimate income obtained from any employment is not enough to purchase daily necessities, pay education and health fees, and save for emergencies. Therefore, inflation is a big problem for both the employed and the unemployed, whether it is relatively low or high. The Nepal Rastra Bank has published data that the average inflation rate as of last Jestha is 5.22 percent. Therefore, the government and the NRB should take initiatives to control price increases and minimize the negative impact on citizens.
The price increase rate from Ashar to Mangsir 2082 was around two percent. The market price rate, which had been increasing continuously since Poush, reached 5.04 percent in Baisakh. It further increased to 5.22 percent in Jestha. According to the monthly report of the NRB, the price increase in the food and beverage group was 4.95 percent in the month of Jestha and 5.37 percent in the non-food and service group. The price increase in some subgroups is even higher. For example, in the month of Jestha 2083, the prices of fruits in the food and beverage group increased by 17.40 percent, ghee and oil by 15.10 percent, meat and fish by 5.24 percent, and vegetables by 4.14 percent.
Similarly, the prices of miscellaneous goods and services in the non-food and service group increased by 16.68 percent, transportation by 15.31 percent, education by 5.54 percent, and clothing and footwear by 5.53 percent. The prices in rural areas increased by 4.78 percent and in urban areas by 5.38 percent.
The main reason for this type of price increase is mainly understood to be the external situation. The ongoing conflict in West Asia is the latest reason. That has created a disruption in the supply system. The impact of the disruption in the supply system and chain has been amplified. Especially petrol, diesel, kerosene and cooking gas prices have been continuously increasing.
This has increased the cost of internal transportation, other expenses have also increased and ultimately the price of goods and services has also increased. Vehicle fares have also increased. It has also increased the transportation expenses of citizens. The US-Iran war has not ended yet. Even though negotiations and ceasefires have been going on for some time, it is difficult for the supply chain to ease until the war ends and the prices of goods and services are reduced here.
This year's monetary policy also states that 'although there has been some pressure on inflation due to external pressures, it is expected to ease gradually.' This can be analyzed by linking it to India. At present, the Indian rupee is weakening against the dollar. The Indian economy has become weak. Since Nepal and India have a fixed exchange rate, it has a direct impact on Nepal as well.
In addition, more than 65 percent of Nepal's trade is with India. The economic turmoil there automatically affects Nepal. Statistics show that the inflation rate in India and Nepal is similar. And, as prices increase in India, it also affects Nepal. For example, in January 2026, the inflation rate in India was 2.75 and in Nepal 2.42. In February, it was 3.21 percent in India and 3.25 percent in Nepal, in March, it was 3.40 percent in India and 3.62 percent in Nepal, in April, it was 3.48 percent in India and 4.47 percent in Nepal, and in May, it was 3.93 and 5.04 percent in India. Nepal is currently experiencing the effects of having a stable exchange rate with India, two-thirds of its trade with India, and being an import-centric economy.
There are not only external factors responsible for price increases, there are also internal factors. There is no strong monitoring system for the prices of goods and services in Nepal. There is no government monitoring and intervention, and the market principle is not working. There is a tendency in the market to prohibit competition. Monitoring is done from time to time, but its effectiveness is ultimately low. Its impact is especially felt by lower and middle class families.
The main responsibility of controlling inflation lies with the Nepal Rastra Bank. It can play a supporting role in controlling inflation by influencing the flow of money. In particular, when interest rates are increased, people prioritize savings and demand in the market decreases, reducing inflation. Similarly, money in the market can be withdrawn. It can restrict the flow of credit to luxury goods.
The Nepal Rastra Bank can adopt established measures. But in Nepal, since non-monetary factors have a greater impact on the market, the central bank has limitations. The second role belongs to the government. The government can control aspects such as black marketing, artificial price increases, and artificial shortages through administrative measures. In addition, fiscal policies such as emphasizing local production, reducing spending in unproductive sectors, adopting austerity, and changing tax rates can also reduce inflation. Therefore, meaningful initiatives from the National Bank and the government are needed at this time.
