Kathmandu: The ripple effects of the ongoing tensions in West Asia are now being felt sharply in Nepal, where the cost of living has surged, and essential supplies are under strain.
Although the 39-day conflict has currently paused, with a temporary halt in the standoff involving the United States and Iran, and inconclusive peace talks in Pakistan, the economic aftershocks have already begun to disrupt everyday life far beyond the battlefield.
For ordinary Nepalis, the consequences are visible in kitchens, pharmacies, and transportation costs. A combination of disrupted global fuel supplies, rising petrochemical prices, blocked maritime routes such as the Strait of Hormuz, and soaring shipping and insurance costs has triggered a cascade of price hikes. These global pressures have translated into higher costs for food, medicine, and basic services, making daily survival increasingly difficult.
The burden is being felt most acutely by low- and middle-income households. In Kathmandu, some landlords have begun pushing for rent increases, citing inflation as justification, even as tenants struggle to keep up with rising expenses. The absence of effective government intervention has only deepened public frustration, with many feeling abandoned during a period of economic stress.
Take the case of Rama Khatri, a low-income worker who has lived in the capital for nearly a decade after moving from Biratnagar. Earning just Rs 18,000 a month at a small footwear factory, she supports three children, two of whom attend school, while carrying a toddler to work each day. Since her husband died in a road accident last year, she has borne the full weight of her family’s survival. She pays Rs 8,000 in rent for a small, poorly equipped room without even basic water facilities, forcing her to purchase drinking water separately.
Now, rising prices have made her situation nearly untenable. The cost of rice has increased by Rs 150 to Rs 200 per sack, cooking oil by around Rs 100, and even a jar of drinking water has become significantly more expensive. Despite this, her salary has remained stagnant for years. Adding to her hardship, her landlord is demanding an additional Rs 1,000 in monthly rent starting next month, citing inflation. With no job opportunities in her hometown, returning is not an option, leaving her trapped in a cycle of rising costs and limited income.
Transportation has also become more expensive, further squeezing household budgets. A bus fare that once cost Rs 20 has now risen to Rs 25, adding an extra Rs 350 to Rs 500 to her monthly expenses. Altogether, her household costs have increased by more than Rs 3,000 per month, a significant burden for someone at her income level. For Khatri, the lack of government relief measures during such a crisis is particularly painful, as she believes public support is most needed during times of hardship.
Her story is not unique. Sunita Lama, another resident in Kathmandu, echoes similar concerns. She notes that where Rs 100 once bought vegetables for two days, it now barely covers a single meal. Vendors, citing higher transport costs, have raised prices dramatically, with vegetables that once cost Rs 20 to Rs 25 per unit now selling for Rs 50 to Rs 60. Staple foods like rice, lentils, and oil have become increasingly unaffordable, placing immense pressure on household budgets.
Retailers, however, argue that they are not responsible for the price hikes. According to the Nepal Retail Traders Association, prices have risen significantly since mid-January, driven primarily by increases at the wholesale and industrial levels. Rice prices have gone up by Rs 70 to Rs 175 per sack, while cooking oil prices have increased by Rs 10 to Rs 45 per litre. Lentils have also seen notable price jumps, with various types rising by Rs 15 to Rs 20 per kilogram.
Industry representatives point to a combination of global geopolitical tensions and domestic policy decisions as the root causes. Increased transportation costs within Nepal—following government-approved fare hikes for public and cargo transport—have further compounded the problem. Meanwhile, neighbouring India has taken steps to cushion its citizens by reducing fuel taxes, whereas Nepal’s measures have largely benefited state entities rather than consumers.
The supply chain disruptions extend beyond food. Nepal’s heavy reliance on imports, particularly for raw materials, has made it vulnerable to global shocks. Shipping costs have risen sharply, with freight rates increasing by US$ 40 to US$ 50 per ton and insurance premiums climbing significantly due to heightened risks in conflict zones. These added costs are inevitably passed down to consumers.
The pharmaceutical sector is also under pressure. Rising petrochemical prices and logistical challenges have increased the cost of raw materials and packaging, pushing up production expenses. There are already signs of shortages in certain medical supplies, including specialized materials used in diagnostic equipment. Industry leaders warn that if the situation persists, even basic medicines like paracetamol and oral rehydration salts could become scarce.
Nepal currently has around 84 pharmaceutical companies with investments totalling Rs 50 billion, many concentrated in industrial hubs like Birgunj, Bhairahawa, and Chitwan. While there is still some stock available, future supplies are expected to arrive at much higher costs, raising the likelihood of price increases or shortages in the near future. Industry representatives have urged the government to introduce policy measures, but so far, no concrete action has been taken.
The impact is also spreading to other sectors, including plastics, packaging, and agriculture. Shortages of raw materials have disrupted production in industries ranging from bottled water to food packaging. Even infrastructure projects may be affected due to difficulties in producing plastic pipes and construction materials. The agricultural sector faces additional challenges, as plastic materials used for irrigation and storage become harder to obtain.
Perhaps most concerning is the potential disruption in the supply of chemical fertilizers. The conflict has affected key production and shipping routes, particularly those linked to the Strait of Hormuz. Fertilizer production, especially urea, depends heavily on natural gas, and attacks on energy infrastructure have reduced output. As a result, global fertilizer prices have surged, with urea prices rising by about 40 percent in recent months.
Shipping disruptions have forced vessels to take longer routes, adding up to 20 days of travel time and significantly increasing costs. Freight charges have risen by around 30 percent, while marine insurance premiums have skyrocketed by as much as 1,000 percent. These factors have pushed fertilizer prices to record levels, raising concerns about availability for Nepalese farmers during the आगामी planting season.
With more than 80 percent of global fertilizer transported by sea, and much of it originating from Gulf countries like Saudi Arabia, Qatar, and the UAE, any prolonged disruption in maritime routes could have severe consequences for agriculture across South Asia. For Nepal, which depends heavily on imports, the stakes are particularly high.
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