KATHMANDU - Annual retail inflation in Nepal accelerated to a six-year high of 7.87% for the month ending mid-May, central bank data showed on Friday, pushed up by soaring food and fuel costs amid pressure on the country's currency.
A surge in crude oil and commodity prices since Russia invaded Ukraine in February has pushed up inflation globally, forcing many central banks to raise interest rates to dampen consumer demand.
Nepal, landlocked between China and India, has banned luxury goods imports until mid-July and switched to a two-day weekend to cut fuel consumption amid dwindling forex reserves.
A 3.7% depreciation in Nepal's currency against the dollar between mid-July 2021 and mid-May 2022 has made imports of fuel and food products more costlier.
On Friday, the currency further depreciated to 124.73 per dollar, the lowest ever, central bank (NRB) data showed.
Food and beverage prices rose 7.13% while non-food and service inflation stood at 8.45%, Friday's reading showed.
Prakash Kumar Shrestha, head of the NRB's Economic Research Department, said rising oil prices could further push up inflation and on Friday, state-owned Nepal Oil Corporation raised fuel prices by up to 7.8%, retailers said.
Prices of staple goods including vegetables, rice, lentils, and cooking oil have also risen sharply. "If it goes on like this there is no alternative to cutting the number of our meals," said Kathmandu housewife Sangita Khadka.
(Reporting by Gopal Sharma)