No let-up in price hike

The month of February witnessed rise in prices of musuro (broken lentil), rice and mustard oil whereas the price of chicken -- again due to the bird flu scare -- decreased.
The recent cases of bird flu in the Eastern Terai have resulted in falling chicken prices across the country. In Kathmandu, the price of chicken fell by almost 25 per cent in February, said a Market Watch report prepared by World Food Programme (WFP) in association with Consumer Interest Protection Group, Federation of Nepalese Chambers of Commerce and Industry, Ministry of Agriculture and Cooperatives' Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate.
The price of musuro (broken lentil) increased by three per cent this month -- most noticeable in Terai markets where prices increased on average by more than 10 per cent, said the report. Rice prices increased marginally and are expected to continue to gradually increase until the paddy harvest in November.
"The seasonal downward trend in the price of rice has ended as prices are three per cent higher than last month and are still expected to gradually increase until the next harvest season in November," the report claimed.
Soybean oil prices remained largely stable while mustard oil prices increased in line with seasonal expectations (up by six per cent). Compared to last year, prices are up by 22 per cent and 27 per cent respectively. Meanwhile, wheat prices also remained largely stable and are only marginally higher than last year -- up by four per cent.
The government has begun selling key food items including rice, wheat and sugar in response to reported carteling by major food wholesellers. The government has claimed that it is selling food items in major consumer markets at around 15 per cent less than the wholesellers. "However, this is not expected to have a major impact on overall prices as the quantity is relatively small," said the report.
In an attempt to control the rapidly increasing cost of sugar, the government is reportedly considering importing up to 50,000 MT from India. If this occurs, then the increased supply will likely reduce the price of sugar that has increased by over 37 per cent between 2008 and 2009.
During February, Nepal Oil Corporation -- the state-run sole petroleum products' supplier -- marginally lowered the cost of petrol to Rs 77 (down by three rupees) and diesel to Rs 57.50.
However, according to a WFP Market Traders Survey conducted in late 2008, only 37 per cent of traders believe transportation costs have reduced from peak rates experienced in the first half of 2008. High transportation costs will continue to keep market prices inflated across the country unless price reductions are fully passed on by transporters.