The ramifications of Russia-Ukraine conflict are being seen in Nepali markets as well.
Prices of commodities and daily essentials have gone up as the war has disrupted global supply chains.
“Prices of foodstuffs have gone up by 10 to 25 percent while transport fares have also increased due to the fuel price hike—all due to the disruption of international supply chains,” says Vijay Singh Baidya, chairperson of the Trade Committee of Federation of Nepalese Chambers of Commerce and Industry.
If things do not soon normalize, goods that are being imported from Russia and Ukraine will have to be procured from other countries.
“For now Nepal has been maintaining its domestic supply chains with stocked goods, which are running out quickly,” says Baidya.
According to the Department of Customs, Nepal imported 45 kinds of goods worth over Rs14 billion from Ukraine in the first seven months of the current fiscal year. In the same period, 91 kinds of goods worth over Rs 4 billion were imported from Russia.
Nepal imports items ranging from vegetable oil, mustard seeds, coriander seeds, toiletries, metals, electronic goods and machinery components from these two countries.
With uncertainty around the war, Baidya says the only option for Nepal is to import these goods from other countries.
Nepal should also consider the price hikes in other items that are indirectly imported from Ukraine and Russia—mainly wheat and petroleum products. The ongoing war has already threatened the global supply of goods like wheat, petroleum and sunflower oil.
“Nepal should have a contingency plan for import of goods it can no longer buy from the two countries,” says Punya Bikram Khadka, information officer at the Department of Customs.
So long as the war continues, continued global price hikes seem inevitable, largely due to the imminent shortage of oil.
Economist Poshraj Pandey says Russia, the world’s second largest oil exporter, has been unable to ship petroleum goods to the international market due to economic sanctions.
“Russia used to sell 5.5 million barrels of oil a day, but now that shipment has largely stopped. This has led to a shortage of oil in the international market, pushing up the price,” he says.
Rise in fuel prices will also increase transport fares, which then drives up the cost of other goods.
Pandey says more than 40 percent of consumable goods in Nepal are imported.
“Prices of goods will continue to go up with the rise in the costs of petroleum products,” he says.