Food prices triple in four years

Price of food commodities has increased by more than three-fold over the past four years.

According to Nepal Rastra Bank, essential food commodities became dearer by 17.3 percent in the fiscal year 2010/11, as compared to 5.4 percent recorded in 2006/07. Prices of non-food prices, however, decreased nominally during the period.

Speaking at a program on Wednesday, experts said price of food commodities has been growing continuously since 2004 in line with rise in global food prices.

Despite rise in production of cereal crops by almost 13 percent in 2010/11, Nepal imported food products worth Rs 9 billion in the fiscal year 2010/11 during the period.

Keshab Acharya, senior economic advisor at the Ministry of Finance, said rising food prices in international market was affecting prices of food commodities in local market. “Investors are shifting to commodity market from stock market following the global financial meltdown in 2008. This has made food commodities expensive in local as well as international arena,” Acharya said.

Experts pointed out wrong tax policy along with arbitrary price fixation of essential commodities in the domestic market as the other reasons behind rising food prices. Factors like supply constraints, market speculation and policy failure is also contributing to rise in food prices.

Basu Sharma, senior training officer at Revenue Administration Training Centre, said food inflation is not only hurting poor populace but also threatening country´s macroeconomic stability.

A study report on inflation prepared by the Revenue Administration Training Centre shows that there has been massive rise in prices of essential commodities like wheat, rice, sugar and edible oil. The report shows that prices of these commodities have been increasing in range of 20 to 30 percent every year.

“Cereals are becoming expensive in Nepal as their prices in international market has more than doubled during the period,” Sharma said, adding, “If price hike continues at this rate, cereals will be dearer by 22 percent in South Asian countries by 2018.”

Acharya suggested that the government review tax structure on food commodities, initiate measures to increase food productivity, introduce fair market policy by wiping away market cartels and syndicates, and announce subsidy to protect people from rising food prices.