KATHMANDU, May 15: While consumers have already been hit hard by the soaring prices of daily essentials, the recent hike in the prices of petroleum products by Nepal Oil Corporation (NOC) on Saturday will even worsen the living condition of the people.
According to Nepal Rastra Bank, the consumer price inflation last month hit 7.28 percent, breaching the central bank’s projected limit of 6.5 percent for this year. While the price hike has reached a five-year high record, the recent increase in fuel prices seems to aggravate the situation, said analysts.
In its latest move, the NOC has raised the prices of petrol and diesel by Rs 10 per liter each, probably the single largest price hike so far. With this, the price of petrol has reached Rs 170 per liter and diesel and kerosene Rs 153 per liter. In the past two years, the prices of petroleum products have increased almost by Rs 74 per liter.
“As the impact of the price hike of petroleum products extends to the production of goods and services, transportation and consumer prices, it is likely to increase the rate of inflation,” said Shanker Man Singh, an economic analyst. When the price of diesel, in particular, goes up, the overall freight goes up, and the cost and price of all sectors go up, he added.
The latest price of petroleum products is the record high price of fuel in the domestic market. Earlier on 14 March 2014, the NOC had set the fuel price at Rs 140 per liter, after which the fuel prices had remained low for a number of years due to the global decline in oil prices.
The NOC, the sole supplier of petroleum in the domestic market, has been pointing at the soaring prices of fossil fuels in the international market. However, it cannot be denied that Nepali consumers are forced to pay exorbitant prices due to the tax burden on petroleum products.
Madhav Timalsina, president of the Consumer Rights Investigation Forum, said the hike in fuel prices will raise transportation costs. “This will impact the supply chain and increase the inflation of overall consumer goods and take down the purchasing power, which will make it even harder for poor people to pay for their meals,” Timalsina said.
Citing the soaring price of petroleum, transporters increased their fares twice in the past 10 months — by 28 percent in July 2021 and by 15 percent in April 2022. This means that the cargo charge and public bus fares have already been increased by around 47 percent, compared to a year ago.