Situation Report on Nepal’s Agrifood Systems October 2023 | Bulletin Number 11

Overall assessment: Nepal recorded its highest Consumer Price Inflation (CPI) in September, surpassing any other month in the first eight months of 2023, affecting both food and non-food items. The average national year-on-year inflation rate for food and beverage prices was 8.2 percent, with the highest CPI increase—11.3 percent—observed in Nepal’s mountainous regions. This surge in inflation seems to be predominantly driven by a 9.7 percent hike in food and beverage prices. The economic repercussions for the urban and rural poor in Nepal that result from this situation are multifaceted. Rising CPI diminishes the affordability of basic necessities for the poor. To cope with higher prices, poor families might resort to borrowing or develop increased reliance on remittances, the former leading to increased household debt and potential long-term economic strain.

Cereal prices continue to rise: The average prices of cereals and their products increased by 13.4 percent in September 2023. This can partially be attributed to the combined effects of India’s export quota and export duty on rice, as more than 90 percent of Nepal’s imports come from India. However, the Government of India has also permitted the export 95 thousand tons of non-basmati rice to Nepal 1 and with the onset of rice harvesting season, prices are expected to decline.