Sugar prices surge in Nepal as festive season nears, reversing earlier assurances

Nepal is grappling with a sharp increase in sugar prices, with the sweetener now costing Rs125 per kilogram, a jump from Rs110 in just one week. This surge comes as the nation prepares for the autumn festive season, a period marked by significantly higher sugar consumption. Households, sweet shops, and food businesses are stocking up for festivals like Dashain, Tihar, and Chhath, further intensifying demand.

Retailers across the Kathmandu valley are selling sugar at Rs125 per kg, according to recent inspections by the Department of Commerce, Supplies and Consumer Protection. Director Anil Kiratee noted that the price difference between retail and wholesale is minimal, suggesting that a constrained supply is the main cause of the price hike. Kiratee emphasized the need to increase supply to stabilize prices.

This situation marks a reversal from earlier assurances given by sugar producers and traders just two months prior, when Nepal imposed a ban on sugar exports. At that time, domestic and imported stocks were deemed sufficient to meet the country's demand for at least six months. However, sugar mills are now warning of potential supply shortages during the upcoming festive season.

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We are inspecting sugar prices daily. We checked retailers’ purchase bills in many places and found that they are selling sugar at the price at which they purchased it from wholesalers. There is no big difference between the retail and wholesale prices, which suggests that the price rise is driven by tighter supply.

The price increase is exacerbated by India's ban on sugar exports, which began on May 13 and is set to last until September 30, 2026. This ban, implemented due to concerns over El Niño-related weather disruptions affecting sugar production, also led to increased sugar smuggling into Nepal. Border security forces have seized approximately 10 tonnes of smuggled sugar.

Consumer rights activists are concerned about a potential repeat of the artificial shortages and price gouging seen in September 2023. During that period, India's suspension of sugar exports due to poor rainfall caused sugar prices to skyrocket from Rs88 to Rs160 per kg. The government was forced to implement a quota system, and black marketing became rampant. The Nepal Sugar Mills Association reports that private mills currently hold only about 7,000 tonnes in stock.

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Last week, we sold 15,000 tonnes of sugar to the Salt Trading Corporation and Food Management and Trading Company at Rs85 per kg, excluding VAT, transportation costs, dealer commissions a