Ram Mahat’s future in-laws had nearly called off the wedding when they found out the event would go over budget, after the prices for rigourous bridal jewelry and catering costs soared following the pandemic.
The hopeful groom had to take out a loan to save his wedding plans. In many Nepalese communities, the groom’s family provides the bride with a set of gold jewelry that now costs millions. The engagement is also sealed with a gift of gold ornaments.
Rampant inflation has made life difficult for everyone, not just men preparing to take their beloved away. From ordinary people to businesses, banks and even the government, all are suffering from the economic crisis which seems to be worsening, insiders say.
“Everything is expensive,” said Mahat, who works as a marketing manager for a private company in Kathmandu.
In February 2020, gold hit an all-time high of Rs 80,300 per tola on virus jitters. The yellow metal was hovering at Rs 75,000 per tola before the onset of the Covid-19 pandemic in Nepal.
On March 9, gold prices broke all records, hitting Rs 105,500 per tola in the domestic market amid escalating Russian-Ukrainian tensions.
Mahat originally planned to buy 12 tolas of the precious metal. The price was then in the five figures. But when the cost rocketed into six figures, Mahat gasped and decided his soul mate should shine less.
“We decided to reduce our production and only bought 8 tolas,” Mahat said. One tola equals 11.66 grams.
Bride-to-be mother Ashmi Rasaili has already bought 5 gold tolas and plans to buy another 2 when the price hopefully drops.
“But the price went up instead,” said Netra Rasaili, the bride’s father. “Marriage has now become an expensive affair. Marriage without gold is not possible these days.”
“I managed the expenses of my eldest daughter’s wedding in one way or another. I am worried about the finances of my youngest daughter’s marriage,” said Rasaili, who works for the government.
Last month, the central bank asked banks to stop issuing letters of credit to buy cars, cosmetics, alcohol and gold – which it considers luxury items – in order to to prevent foreign exchange reserves from being further depleted.
Immediately after the government lifted the second lockdown on September 1, 2021, imports simply increased.
Nepal’s annual import bill crossed the Rs 1 trillion mark for the first time in the financial year 2017-2018. Imports soared due to the reconstruction campaign following the 2015 earthquakes, and also because Nepalis had more pocket money in their pockets after increased remittances.
Three years later, Nepal had spent a trillion rupees in just six months buying foreign goods as it splurged on things it had always wanted after the devastating Covid-19 pandemic began to decline.
Government statistics show that the increase in prices of foreign goods is one of the main reasons for the higher value of imports.
Reports indicate that price gains are rising in many advanced economies as consumer demand, shortages and other pandemic-related factors combine to fuel a surge in inflation.
The impending economic crisis has affected all sectors, making even social events, including wedding receptions, more expensive.
Suresh Lal Shrestha, owner of Berry Banquet in Satdobato, said per-plate charges at most catering outlets had risen sharply in just a year or two.
Consumers say wedding buffets have become so expensive it feels like dining in a five-star hotel. Luxury hotels also lured wedding receptions with discounted deals as they had remained totally closed for almost two years, and the events would recharge their revenue streams.
“It costs between Rs 1,500 and Rs 1,600 per plate depending on the banquet and party palace menu,” said Shrestha, who also operates two other party venues in Samakhusi and Bhaktapur.
“The price of everything has gone up, from food, rent and labor to even water. Among food products, the prices of edible oil and vegetables have more than doubled,” he said. he declared.
“High prices discourage people from hosting social functions. There were around 500-600 guests at weddings before the pandemic. After the pandemic, we don’t see more than 300 guests on average,” he added .
With people hosting fewer wedding parties, sales of consumer durables also fell.
“Demand for consumer electronics typically increases during wedding season. We have seen a steady increase in sales for decades,” said Bishnu Gyawali, Deputy General Manager of CG Electronics.
“Consumer electronics sales are not very good these days,” Gyawali said.
“One-door refrigerators with a capacity of 180 to 190 liters and 32 to 43 inch televisions were the most popular products during the wedding season, followed by washing machines with a capacity of 7 to 8 kg and other household appliances,” he said.
“Prices have gone up so much that consumers think twice or thrice before buying anything. All consumer electronics goods have become more expensive by around 30% compared to the pre-pandemic period.”
Traders say that transport costs, which are not under their control, increased like everything after the Russian invasion of Ukraine.
According to a World Bank report titled “South Asia Economic Focus Reshaping Norms: A New Way Forward” released on Wednesday, the rise in commodity prices in Nepal is being boosted by the war in Ukraine.
Transportation prices, construction costs and other consumer prices are rising, which will dampen aggregate demand, the report said.
This could reduce Nepal’s economic growth by around 0.2 and 0.6 percentage points in the current fiscal year 2021-22 and the next fiscal year 2022-23 compared to previous projections, the agency said. multilateral funding.
With the Russian-Ukrainian war raging, the World Bank has also revised Nepal’s growth forecast.
Nepal’s economy, driven by the recovery of the service sector amid high Covid vaccination rates, is expected to grow 3.7% in the current fiscal year and 4.1% in the year next.
According to the report, Nepal’s direct trade with Russia and Ukraine is low, but rising global commodity prices are expected to increase import costs for fuel, agricultural products, metals and minerals. These higher prices are expected to widen the current account deficit, reduce the growth rate and increase inflation.
Pradeep Shrestha, owner of Harati Furniture in Kumaripati, said furniture prices had jumped by more than 15%.
“The price of a pair of sofas normally starts from Rs 20,000, while cabinet prices start from Rs 12,000 and dining table prices start from Rs 15,000,” he said. -he declares.
“Although the wedding season has started, the demand has not swelled like before. Higher prices and people cutting back could be the reason sales remain at the usual level even during wedding season,” Shrestha said.
Banks do not buy gold because they are facing a liquidity crisis.
On March 6, the central bank of Nepal reduced the daily gold import quota to 10 kg to avoid the depletion of foreign exchange reserves.
“Demand for gold fell 50% in the middle of wedding season,” bullion traders said.
“Despite the wedding season, the demand for gold has dropped by around 50%,” said Tej Ratna Shakya, former chairman of the Federation of Nepalese Gold and Silver Dealers Associations.
“It shows that people’s purchasing power has gone down. Barely 20 kilos of gold are exchanged daily even during the wedding season. We have never seen such slow business before except during the pandemic and the earthquake.
In Nepal, gold jewelry is a traditionally and culturally essential accessory during wedding celebrations when women put on their finest adornments.
A middle-class family usually buys 10 tolas of gold for wedding jewelry, but people get by with 3-4 tolas these days, according to traders.
“Attendance has dropped by 50% even with the wedding season in full swing,” said Prabin Bajracharya, owner of Hira Bajra Jewelery Traders in Thimi, Bhaktapur.
“If it weren’t for the wedding season, no customers would enter my shop,” Bajracharya said. “It’s not just the economy, consumer confidence, which is one of the determinants of the economy, has also fallen sharply.”