In May 2022, retail prices of most food commodities monitored across 15 major markets showed an upward trend with sharp increase for prices of vegetables, fruits and edible oil. Prices of cereals and pulses remained relatively stable.
Overall, the increases observed in the May market monitor can be largely explained by the impact of the Russia-Ukraine crisis on Nepal’s retail markets- shortage of some food commodities, increasing fuel prices and transportation costs, mainly across large consumer and urban markets.
This could be related to the export ban of some food commodities, disruptions in the global supply chain and price volatility. However, there is no observed disruption in the local supply across the country.
Nearly 1 out of 3 traders reported insufficient availability of food commodities. All traders reported to have insufficient edible oils in the markets followed by wheat and pulses (53.8%) and fuel (38.5%). Moreover, more than 73 percent of traders reported that edible oil would likely be scarce in the coming months, followed by fuel (56.1%), wheat (34.1%) and pulses (29.3%).
Supply and transportation of goods to markets remained stable; however, increase in transportation costs has been observed in all surveyed districts. Medium level of supply and transportation of goods to markets was reported by 88 percent and 93 percent of traders, respectively.
On average, 95 percent of traders observed rise in transportation costs.
Demand for labour in the market was also found to be largely at medium level.
The overall inflation, as measured by the Consumer Price Index (CPI), increased by 7.87% year-on-year and 1.43% month-on-month in May 2022.
The CPI of food and beverage was 7.13% y-on-y and 1.5% m-on-m. The y-on-y inflation of non-food and services was 8.45 and 1.35% m-on-m.
Compared to last year, the overall market situation and prices of essential commodities showed an upward trend with relatively higher fluctuations, chiefly due to the global markets and supply chain disruptions. This can put increasing pressure on local markets, as well as food access, particularly for vulnerable households. Ensuring access to food for these households and smooth supply and availability of goods in the markets will be critical for price stability and food security status of vulnerable groups.