Thesis Inflation and its impact on livelihood

This is a thesis work. it is about inflation and its impact on livelihood. Nepal was suffer from inflation on 2022. It has analyzes inflation and its impact on food , non-food sector and mental health of teenager.

1. INFLATION AND ITS IMPACT ON LIVELIHOOD
A Thesis
Submitted to: Department of Economics
Padmakanya Multiple campus
Faculty of Humanities and social science
Tribhuvan University
Kathmandu Nepal
In partial fulfillment of the requirements
In the degree of
MASTER OF ARTS
Of
ECONOMICS
By Lekha Koirala
Roll No: 3814074
T.U. Regd No: 6-3-38-1491-2022
September 2025
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2. ACKNOWLEDGEMENT
I would like to acknowledge and give my warmest thanks to my supervisor Mr. Gagan Sir who
made this work possible. His guidance and advice carried me through all the stages of writing
my project. I would also like to thank my committee members for letting my defense be an
enjoyable moment, and for your brilliant comments and suggestions.
Finally I wish to acknowledge the Tribhuvan University for providing me with a thesis working
opportunity without which this work couldn’t have never begun.
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3. Table of contents
Acknowledgement…………………………………………………………………………..ii
Table of content …………………………………………………………………………….iii
Executive Summary………………………………………………………………………...vii
CHAPTER: ONE INTRODUCTION
1.1 Background ………………………………………………………………………………….1
1.2 Introduction of inflation……………………………………………………………………...6
1.3 Current Inflation situation in Nepal………………………………………………………….7
1.4 Statement of the problem…………………………………………………………………….8
1.5 Objectives of the problem……………………………………………………………………8
1.6 Rationale of the problem……………………………………………………………………..8
1.7 Limitation of the problem……………………………………………………………………9
1.8 Organization of the study……………………………………………………………………9
CHAPTER: TWO LITERATURE REVIEW
2.1 Literature review …………………………………………………………………………..10
2.2 Conclusion………………………………………………………………………………….22
CHAPTER: THREE RESEARCH METHODOLOGY
3.1 Research Design …………………………………………………………………………..25
3.2 Sources of data……………………………………………………………………………. 25
3.2.1 Primary data ……………………………………………………………………………..25
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4. 3.2.2 Secondary data…………………………………………………………………………...25
3.3 Sampling …………………………………………………………………………………..26
3.3.1 Random Sampling………………………………………………………………………..26
3.3.2 Simple random Sampling ……………………………………………………………….26
3.4 Study Population……………………………………………………………………….26
3.5 Sampling size……………………………………………………………………….….27
CHAPTER: FOUR DATA ANALYSIS:
4.1 Past Analysis …………………………………………………………………………28
4.2 Impact of Inflation on food prices…………………………………………………...30
4.2.1 Impact on cereals pulses vegetables and meat/fish…………………………………..30
4.2.2 Impact on milk product/Egg Ghee/Oil, Fruits and Sugar…………………………….32
4.2.3 Impact on Spices, alcoholic non –alcoholic and tobacco…………………………….34
4.3 Impact of inflation on non food prices:…………………………………………………
4.3.1Impact on clothes and footwear……………………………………………………….36
4.3.2 Impact housing and utilities……………………………………………………………37
4.3.3 Impact on Furnishing and Household Equipments……………………………………38
4.3.4 Impact on health sector………………………………………………………………..39
4.3.5Impact on transportation sector………………………………………………………...40
4.3.6 Impact on Communication Sector ……………………………………………………41
4.3.7 Impact on recreation and culture sector……………………………………………….42
4.3.8 Impact on Education Sector……………………………………………………………43
4.4 Impact on perception and mental health of teenagers……………………………….44
4.4.1 Impact on daily expense ………………………………………………………………44
4.4.2 Impact on academic performance………………………………………………………45
4.4.3Impact on sports…………………………………………………………………………46
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5. 4.4.4 Impact on entertaiment …………………………………………………………………47
4.4.5 Impact on parents……………………………………………………………………….48
4.4.6 Impact on mental health………………………………………………………………...49
4.4.7 Impact on Habit …………………………………………………………………………50
4.4.8 Impact on expenses…………………………………………………………………....51
4.4.9 Perception on getting part time job……………………………………………………52
4.4.10 Perception on government should take step to control inflation……………………..52
4.4.11 Perception on relax or panic during inflation………………………………………...52
4.4.12 Perception on how educational institutions support student during inflation………...52
4.5 Impact on different income groups……………………………………………………..53
4.5.1 Impact on low income group……………………………………………………………53
4.5.2 Impact on middle and high income group……………………………………………….53
CHAPTER: FIVE CONCLUSION AND RECOMMENDATION:
5.1 Conclusion………………………………………………………………………………… 54
5.2 Recommendation…………………………………………………………………………...56
LIST OF FIGURE
1.1World inflation rate from 1960-2010……………………………………………………………….5
1.2Current inflation situation in Nepal…………………………………………………………7
4.1Past Analysis……………………………………………………………………………….28
4.2.1Impact on cereals,pulses vegetables, meat/fish………………………………………….31
4.2.2Impact on milk product/Egg, Ghee/oil,fruits and sugar…………………………………..32
4.2.3 Impact on spices alcoholic non alcoholic tobacco……………………………………....34
4.3.1 Impact on clothes and footwear………………………………………………………....36
4.3.2 Impact on housing and utilities ………………………………………………………….37
4.3.3Impact on furnishing and household equipment………………………………………... 38
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6. 4.3.4Impact on health sector…………………………………………………………………..39
4.3.5 Impact on transportation sector…………………………………………………………..40
4.3.6 Impact on communication sector ………………………………………………………..41
4.3.7 Impact on recreation and culture………………………………………………………….42
4.3.8 Impact on education………………………………………………………………. 43
4.4 Impact on daily expenses……………………………………………………………..44
4.42 Impact on academic performances…………………………………………………...45
4.4.3 Impact on sports……………………………………………………………………..46
4.4.4 Impact on entertainment……………………………………………………………...47
4.4.5 Impact on parents…………………………………………………………………….48
4.4.6 Impact on mental health………………………………………………………………49
4.4.7 Impact on habit………………………………………………………………………..50
4.4.8 Impact on expenses…………………………………………………………………….51
References……………………………………………………………………………………58

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7. Executive Summary
The research aims to analyze the inflation and its impact on livelihood. It is based on the
inflation that occurs in Nepal after Covid Pandemic and Russian Ukraine war. It analyses overall
inflation that occur in Nepal. It analyses the increase in price of commodities as well as service
sector. It also analyses how teenager of Nepal has mentally affected by inflation 2022. The
research includes primary data and secondary data. The secondary data is collected through
official website of NRB and primary data are collected through questionnaires. The secondary
data is analyzed through time series plotting and primary data is analyzed through percentage bar
graph. The result is that Nepal suffer from inflation because Nepal is import based country and it
is directly affected by any emergencies happen outside the country. The result is that due to
inflation the price of food and non food sector rises. This increase poverty and reduce economic
growth. This research concluded that policy like upgrade infrastructure, improving education and
training, reducing businesses burden, increasing productivity can help to control the inflation.
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8. viii

9. CHAPTER: ONE
INTRODUCTION
1.1 Background
Inflation has been a feature of history during the entire period when money has been used as a
means of payment. One of the earliest documented inflations occurred in Alexander the Great's
empire 330 BCE. Historically, when commodity money was used, periods of inflation and
deflation would alternate depending on the condition of the economy. However, when large,
prolonged infusions of gold or silver into an economy occurred, this could lead to long periods of
inflation.
The adoption of fiat currency by many countries, from the 18th century onwards, made much
larger variations in the supply of money possible. Rapid increases in the money supply have
taken place a number of times in countries experiencing political crises,
producing hyperinflations – episodes of extreme inflation rates much higher than those observed
in earlier periods of commodity money. The hyperinflation in the Weimar Republic of Germany
is a notable example.
Following the world war I Germany experience the period of severe hyperinflation particularly
in 1922 and 1923. This was driven by a combination of factors including the massive
reparations imposed by the treaty of versailles the government decisions to print more money to
cover expenses and general inflationary environment in Europe. The hyperinflation had
devasting consequences wiping out personal saving causing widespread unemployment and
contributing to political instability. During Inflation in germany after world war I the value of
national currency Papier mark collapsed from 8.9 per us$1in 1918 to 4.2 trillion per us$1 by
November 1923.
The hyperinflation in Venezuela is the highest in the world, with an annual inflation rate of
833,997% as of October 2018.
]
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10. The term originates from the Latin inflare (to blow into or inflate). Conceptually, inflation refers
to the general trend of prices, not changes in any specific price. For example, if people choose to
buy more cucumbers than tomatoes, cucumbers consequently become more expensive and
tomatoes less expensive. These changes are not related to inflation; they reflect a shift in tastes.
Inflation is related to the value of currency itself. When currency was linked with gold, if new
gold deposits were found, the price of gold and the value of currency would fall, and
consequently, prices of all other goods would become higher.
By the nineteenth century, economists categorized three separate factors that cause a rise or fall
in the price of goods: a change in the value or production costs of the good, a change in the price
of money which then was usually a fluctuation in the commodity price of the metallic content in
the currency, and currency depreciation resulting from an increased supply of currency relative
to the quantity of redeemable metal backing the currency. Following the proliferation of
private banknote currency printed during the American Civil War, the term "inflation" started to
appear as a direct reference to the currency depreciation that occurred as the quantity of
redeemable banknotes outstripped the quantity of metal available for their redemption. At that
time, the term inflation referred to the devaluation of the currency, and not to a rise in the price
of goods. This relationship between the over-supply of banknotes and a resulting depreciation in
their value was noted by earlier classical economists such as David Hume and David Ricardo,
who would go on to examine and debate what effect a currency devaluation has on the price of
goods
Historically, inflations of varying magnitudes have occurred, interspersed with corresponding
deflationary periods, from the price revolution of the 16th century, which was driven by the
flood of gold and particularly silver seized and mined by the Spaniards in Latin America, to the
lar Historically, inflations of varying magnitudes have occurred, interspersed with corresponding
deflationary periods, from the price revolution of the 16th century, which was driven by the
flood of gold and particularly silver seized and mined by the Spaniards in Latin America, to the
largest paper money inflation of all time in Hungary after World War II.
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11. Following the World War II many countries experienced a surge in inflation due to a
combination of pentup consumer demand. Supply shortages and removal of war time price
control. In some nations this inflation was severe leading to currency devaluation and even
economic collapse. Wartime rationing and restrictions on civilian goods led to a large pool of
saving and a sesire to purchase items that were unavailable during the war.
Factories had been retooled for war production and needed time to transition back to civilian
goods, leading to shortages of consumer products.
Many countries had implements price controls during the war to manage inflation. The removal
of these controls after the war allowed prices to rise to meet demand.
In some cases government had explained the money supply to finance the war effort leading to
more money chasing a limited supply of goods.
In France wholesale price were 1820 % higher in 1948 than before the war. In Austria wholesale
price were 200% higher in 1948 than before the war. In Japan wholesale price were a massive
10000% higher in 1948 than before the war. In Germany the monetary system in some parts of
Germany collapsed the people restored the barter.
In USA inflation after world war II though not to the same extreme as some other nations. In
1946 inflation soared to 18% peaking at 20% in march 1947 before decreasing to 9% by
December 1947.
However, since the 1980s, inflation has been held low and stable in countries with
independent central banks. This has led to a moderation of the business cycle and a reduction in
variation in most macroeconomic indicators – an event known as the Great Moderation.
]
The Great Inflation was the defining macroeconomic event of the second half of the twentieth
century. Over the nearly two decades it lasted, the global monetary system established during
World War II was abandoned, there were four economic recessions, two severe energy shortages,
and the unprecedented peacetime implementation of wage and price controls. It was, according
to one prominent economist, “the greatest failure of American macroeconomic policy in the
postwar period”.
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12. But that failure also brought a transformative change in macroeconomic theory and, ultimately,
the rules that today guide the monetary policies of the Federal Reserve and other central banks
around the world. If the Great Inflation was a consequence of a great failure of American
macroeconomic policy, its conquest should be counted as a triumph.
In 1964, inflation measured a little more than 1 percent per year. It had been in this vicinity over
the preceding six years. Inflation began ratcheting upward in the mid-1960s and reached more
than 14 percent in 1980. It eventually declined to average only 3.5 percent in the latter half of the
1980s.
While economists debate the relative importance of the factors that motivated and perpetuated
inflation for more than a decade, there is little debate about its source. The origins of the Great
Inflation were policies that allowed for an excessive growth in the supply of money—Federal
Reserve policies.
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13. Figure 1: Inflation rate from 1960 to 2010
The first part of the story, the motive underlying the Great Inflation, dates back to the immediate
aftermath of the Great Depression, an earlier and equally transformative period for
macroeconomic theory and policy. At the conclusion of World War II, Congress turned its
attention to policies it hoped would promote greater economic stability. Most notable among the
laws that emerged was the Employment Act of 1946. Among other things, the act declared it a
responsibility of the federal government “to promote maximum employment, production, and
purchasing power” and provided for greater coordination between fiscal and monetary
policies .This act is the seminal basis for the Federal Reserve’s current dual mandate to
“maintain long run growth of the monetary and credit aggregates…so as to promote effectively
the goals of maximum employment, stable prices and moderate long-term interest rates” .
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14. 1.2Introduction of Inflation
In economics, inflation is defined a sustained increase in the general price level of goods and
services in an economy over a period of time. It is measured as an annual percentage
increase. When the general price level rises, each unit of currency buys fewer goods and
services. This implies that inflation reflects a reduction in the purchasing power per unit of
money. In other words, inflation indicates a loss of real value in the medium of exchange and
unit of account in the economy. Different definitions of inflations have been given by different
Economists some of which are as follows:
1. In the words of Peterson, “The word inflation in the broadest possible sense refers to any
increase in the general price-level which is sustained and non-seasonal in character.”
2. According to Coulborn inflation can be defined as, “too much money chasing too few goods.”
3. According to Samuleson-Nordhaus, “Inflation is a rise in the general level of prices.
4. As per Johnson, “Inflation is an increase in the quantity of money faster than real national
output is expanding”.
5. Keynes has presented his view that true inflation is the one in which the elasticity of supply of
output is zero in response to increase in supply of money.
Inflation is one of macroeconomic indicators become an important issue among economists.
Inflation is the tendency increase in average price in general (Parkin, 1993). Meanwhile in other
side, inflation is a condition which excess demand for goods and services generally (Lerner in
Gunawan, 1995). According to (Mankiw, 2000), inflation is rise in all prices. So, a policy related
to inflation is a policy relating to price stabilization. Inflation phenomenon in Indonesia actually
is not the short phenomenon, that is only happens incidentally (Adwin in Adya Fadhila Annisa,
2011). In fact, the same general problem also happens in other developing countries. The
inflation problem in Indonesia is kinds of long-term inflation that caused by structural of
economic obstacles that still occur in Indonesia. The economic and stability were influenced by
many factors; some of the factors which influence development of economics are the level of
inflation rate (Friedman in Adya Fadhila Annisa, 2011).
Inflation is an indicator of economic stability which becomes focus and attention in
macroeconomics policy so that is growth rate is always afforded to be low and stable (Bank of
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15. Indonesia, 2003). For that, Bank of Indonesia has authority to maintain the stability of inflation
in order to create expected economic growth, employment expansion, and the availability of
good or services to fulfill the people needed.
1.3 Current Inflation Situation in Nepal
Nepal Rastra Bank highlighted that the inflation in Nepal has reached 7.87% in the first 10
months of the current fiscal year (FY) 2021/22. This has resulted in a six-year high. Inflation in
the first 10 months of the FY for food and beverages stood at 7.13 %, compared to 8.45% for
non-food and services. As per the report, prices of edible oil and ghee went up by almost 25%,
while the price of fruits, milk products and eggs, pulses, and tobacco products increased by 12.61
%, 11.30 %, 10.53 %, and 9.70 %, respectively, on a year-on-year basis. Similarly, the price of
transportation increased by over 21%, and education by 11.64% on a y-o-y basis, under the non-
food and services category. The following figure shows the annual rate of inflation over the past
seven years.
Source: Nepal Rastra Bank
Figure 2: Inflation rate of Nepal year 2014-2022.
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16. 1.4Statement of the problem
Nepal has hit by inflation during recent years. The price of food and commodity is increasing. It affects
the revenue and expenditure of government. The low income, middle income and fixed income group is
affected. The main determinants of inflation in 2022/2023 are Covid pandemic, and Russia Ukraine war.
Fuel prices rises, shortages of supply and NRB adjusted interest rate. Nepal is import based country so
inflation hit it more. Due to inflation 2022/23 price of food item and fuels and transportation is increased.
However in 2024 the inflation is decreased by 5.6%.
1.5 Objectives of the study:
The main objective of study is to know the Inflation Situation in Nepal and under this other
objectives are:
To analyses impact of inflation in food sector and non food sector.
To analyses impact of inflation on peoples’ perception and their mental wellbeing.
To analyses impact of inflation on different income group: low, middle and high.
1.6 Rationale of the study:
Nepal is small economy. It is not a board economy. But having a small economy compared to its
neighbor country India and China. It was frequently hit by inflation. The first inflation Nepal
experienced was in 1966 it was 30.42% and recent inflation Nepal experienced was in 2022/23
and it was 8.64%.. There are several factors that determine inflation in Nepal some of them are
price level, budget deficit, money supply and real GDP continuosly rising for many years
increasing in taxes and decreasing in productivity. Inflation is a interesting topic to study and it is
interesting topic for every student of economics. It determine economic growth and
development. By analyzing how inflation lead to poverty and how individuals will be unable to
sustain it will be helpful for knowing inflation not directly hinder the economy as a whole but it
comes from individual level. Inflation hinder individual citizen first and then it impacted overall
economy. So Inflation and its impact on livelihood is undertaken.
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17. 1.7Limitation of the study
The major limitation of the study are discussed below:
The report analysis is based on secondary data which is limited to the books,
websites, yearly bulletins.
The reports analysis is based on primary data which will be taken from only particular
place.
.
The study is only focus on inflation and its impact on livelihood.
The study doesn’t study impact of inflation on others sector like industrial sector,
interest rates, and investment sector.
1.8 Organization of the study:
The first chapter provides general introduction of inflation, Background of the inflation,
Current situation of the inflation in Nepal, Statement of the study, Objectives of the study,
Rationale of the study limitation of the study.
The literature review has done in chapter two.
Chapter three presents the research design, Sources of data Sampling Sampling size, and
Population.
Chapter Four provide Data Analysis. It provides Past Analysis, Impact of inflation food
sector, non food sector, mental health and perception and impact on different income
groups.
Chapter Five provide Conclusion and Recommendation.
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18. CHAPTER: TWO
Literature Review
2.1 Literature Review
Inflation cause when the price of goods increase there is less money supply and government print
too much money. Inflation has impact on livelihood. It affects people especially fixed income
group people it affect puplic they cannot maintain and sustain their lifestyle.
Inflation has impact on people consumption pattern. Inflation has impact on livelihood.
According to Sweta Timilsina and Pramod Pyara Shrestha 2025
Inflation has great influence in economy not only in individual household level but also to
national and international level. Sweta Timilsina and Pramod Pyara Shrestha analyzed the short
run and long run determinants of inflation in Nepal using both demand side and supply side
factors. There are two variables Dependent variable and independent variables. Dependent
Variables is Nepal Inflation. Independent Variables are Indian Inflation, Growth in Board Money
supply, Growth in agricultural production. Growth in government expenditure, growth in real
GDP, growth in oil prices. Nepal Inflation are related with variables like Indian inflation growth
in money supply growth in agricultural production growth in petroleum prices and GDP growth
rate is explored.
Study finds that there is a long term relationship of Nepalese inflation to Indian inflation and
growth in money supply.
There is a short term relationship of Nepalese inflation to agricultural production.
In the study Auto regressive Distributed Lag Model (ARDL) and error correction Model (ECM)
are used to analyze inflation. This study analyses the inflation in Nepal over last five decades.
According to Guru Prasad Neupane 1988
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19. Nepal being a least developed countries and low domestic production and heavily import based
is the main cause of inflation. Inflation is simply increasing in the price of goods and services
and decreasing in the value of money. According to him consumer price index and GDP
deflation are main measures of inflation.
If the rate of inflation is less the 5 % it is acceptable but if the rate of inflation is above 5% then
it is undesirable. He used monetarist model and structuralist hypothesis to evaluate the causes of
inflation.
The monetarist model can provide a fairly reasonable explanation odf the inflationary process in
LDC. In Nepal as least developed countries and due to lack of available data monetarist model
and structuralist model cannot considered but Guru Prasad Neupane used monetarist model and
structuralist model to analysis inflation.
According to Guru Prasad Neupane the main causes of inflation in Nepal is demand pull
inflation. There is low production in agriculture production. There is increasing population and
increasing population demand for food item is also increasing. Their demand for pulses,
vegetables milk, milk product, egg, meat, is also increasing. This cause demand pull inflation in
Nepal.
Due to the slow growth of percapita GDP money supply both narrow M1 and board money has
increased rapidly. This causes inflation in Nepal.
Another main cause of inflation in Nepal is government expenditure are in increasing trend.
Expenditure of government increase whereas revenue from taxes and non taxes aren’t adequate.
Therefore there is a government budget deficit. Government borrow from both foreign and
domestic sources so inflation in Nepal occur.
Guru Prasad Neupane writes monetary policy as well as fiscal policy are major instrument to
control inflation. In monetary policy increasing money supply in line with the growth of per
capita GDP will helps to control the inflation. In fiscal policy it should be directed towards
controlling regulating and managing regular supply of goods.
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20. This study shows how inflation occurs in LDC during 1988 and how to control it but it is limited
to the quantitative data analysis.
According to M. Kalani 2021
M.Kalani analyzed inflation and its impact on economic growth on India since 1991. India isn’t
left to experience inflation. India can bear 6% of inflation if it become above 6% it will hamper
economy. It analyses the inflation of India from 1991-1992 to 2019-2020.
It uses time-series data on all the macroeconomic variables to analyze the inflation. It also uses
graph, means, standard deviation correlation and tests to analyze inflation.
He uses mean median and standard deviation. Mean and median shows converge for variables.
Standard deviation show variability in the data. But this analyze shows that variability don’t
meet the normality condition. This analyses show that the variables exhibit inconsistency. So he
uses stationarity properties of the variable. Stationarity properties insure the integration of
variables.
According to M Kalani increase in money growth increase the inflation. Increase in commodity
price also increase the inflation. Import and export also cause inflation.
So he analyses the inflation but its impact on economic growth. But his analyses is limited to
quantitative analyses.
According to Hilda Shamsadini September 2012
He analyses the effects of inflation on accounting and financial statement . He explains that if
monetary unit is stable and there is no erosion in its values as a result of inflation.
He uses historical cost accounting and inflation accounting methods to calculate all the variables.
Researcher uses statistical tools like correlation coefficient , t-test to analyze the hypothesis.
He uses the inflation accounting of various companies in India. According to researcher the
preparation and presentation of inflation accounting is not very encouraging. Discourage
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21. investment is major effects of inflation on firms. Inflation brings less predictive return, fall in
demand. Under inflation investors are primarily concerned with the protection of the purchasing
powers.
So researchers explain valuation of both profit and balance sheet at historical cost can have
significant impact on rate of return. So according to researcher historical cost accounting is not
sufficient to reflect true financial position of business so companies must replace historical cost
accounting with inflation accounting.
According to Alvin Etang, Thierry Hounasaamd pace October, 2022.
Inflation has worst impact on the --livelihood of Suadan. It increases the food prices and non-
food prices. It has tremendeous impact on various aspects such as
It increases the food prices.
It reduces girls primary and secondary school attendences.
Decline in labour force participation.
Increase unemployment.
Increasing Hunger.
Households Perception.
Inflation has increase food prices. Due to the higher share of food in the poor’s consumption
basket. Although in Sudan some poor rural households may be net producers of food and thus
less impacted by the high food price inflation. But due to limited agricultural sector in south
sudan and the usually high reliance on imported food suggest that the poor are also dependent on
food imports whose prices and availability have been severely affected by inflation.
Another impacted of inflation on south sudan is female especially girls have to sacrifice their
education. Girls attendance in school has been decreasing due to rise in inflation. Due to
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22. inflation household become poorer and whose schools are distant away from their homes as they
may be able to afford the cost for living far away from school.
Inflation cause decrease in labour force participation and increasing unemployment. Inflation
causes increase in food price and decrease in labour force participation and increasing
unemployment. Infation also cause decrease in education level and increasing unemployment.
Although increase in food price and non food price increases the hunger but increases in non
food prices is having greater impact. Rising food price have led to growing food insecurity for
the poorest household and hunger has increased sharply.
Inflation also has negative impact on households perception. Urban household felt that their
living condition were fairly bad and very bad.
The high inflation that occurs between 2015-2017 in south Sudan put many households under
extreme financial stress. In south Sudan inflation during 2015-2017 increases the prices but
people income didn’t increase. There was increased in prices of both food and non food prices. It
was highest inflation till occur. Though there was increase in both food and non food prices but
its effect is more on non-food prices. The inflation impacted negatively in various households
livelihood, indicators related to poverty and education, Perception and welfare. It affects mostly
in urban areas. People also suffer from loss of purchasing power of wages and salaries.
The south Sudan is a under developed country and such shocks can hamper economic growth.
However this study is limited only on urban areas so it may not directly generalized to the entire
country.
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23. According to Aweys Baratow Malin,
In a small open economy like Somalia where almost every things is imported a depreciation
currency raises the domestic prices of imported goods and thus reduces the purchasing power of
money. Inflation has increase the cost of living of households. Inflation constantly increase
general price of goods and service. The researcher defines the inflation is the general increase in
price level of different commodities in the economy. Inflation has impact on purchasing on
commodity price in the market and it impact on household livelihood.
Inflation has impact on economic condition of household. This study was done in 2016 and it
shows inflation is high in Slomalia. This study implies that inflation play a vital role in reducing
the economic growth. It also shows increase in inflation decrease the pension fund and invest
ment portfolio. Increase in inflation decrease in power of purchasing, increase price of
commodity.
However this study don’t explain in details how inflaton can increase the poverty.
According to Evangelas charalampakis, Lukas Henkel , Chiareasbat and Bruno Fagendin
Recent inflation in euro are affecting in two main areas: Low income households, and high
income households. Inflation has affecting low income households and high inflation households
differently.
Due to different spending patterns and their ability to buffer cost of living increases through
savings and borrowing.
The effects of inflation rate experienced by lowest and highest income group differ. Low income
households consume a larger share of their income, save less and more liquidity constrained and
high income households. Low income households in Europe spend a higher proportion in their
total consumption expenditure on food, electricity, gas and heating and lower proportion on
transport, recreation, restaurants and households goods relative to high-income households.
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24. According to House Budget survey (HBS) I Europe owner occupied housing cost are not covered
by the HICP.
Both owner occupied housing costs and rents were excluded from the calculation of effective of
inflation rate. They are not severely effected by inflation rate.
Energy and food prices are major distributional effects across low and high income households.
Low income households are more vulnerable to these price shifts as they spend a higher
proportion of their total consumption expenditure on essentials such as foods electricity gas and
heating tend to save less and more subject to liquidity constraints.
According to Sanem, 2023 April
The global supply chain has been severely distrupted as a result of Russian Ukraine war. It
hampered production and trade leading to catastrophic fuel and food shortage.
In Bangladesh as a result prices have skyrocketed for everything from food ad non food item.
Global crisis has a devasting impact on the people of Bangladesh, where low-income groups are
the worst suffers.
Real income is eroded by inflation which lowers the purchasing powers of the poor. People who
have limited employment opportunities and those who work in the informal sector are continue
to struggle. People whose income and salaries aren’t adjusted for excessive inflation suffer a lot.
Many poor people are compelled to use their savings or loans to pay for their daily necessities.
Inflation escalated prices of food, fuel and other commodities in the global market shortage of
domestic production supply side disruptions as well as imperfections and anamalies in the local
market and depreciation.
16

25. Global issues are not the only reasons for high inflation. Problems in domestic economic and
market management are also responsible for the persistent inflationary pressure for a long period
of time.
According to Min Bahadur Shrestha and Sashikant Chaudhary.
Impact of inflation especially food price inflation is higher in mountain and terai region. Terai
region has highest impact of food price inflation. It increases the poverty.
Impact if inflation is serious in mid and far western region. Among mid and far western it
increases poverty in mid western and poverty is more than far western region. While food
poverty is higher in far western rather than mid western. While inflation has least impacted in
central region.
While impact of food price inflation is least affecting urban part while rural areas are more
affected.
Changes in food prices generally affects all the households. As people differs in terms of their
needs, consumption pattern and food position the effects of food price changes will also be
different from one households to another.
Depending on households position as net seller or net buyer of staple food, increase in price of
stable food would raise the income of household s that are net sellers and add to the hardship of
the households that are net buyers. Hardship of the poor people increases because they have to
spend a larger share of their income on essential foods and less is left to spend on other items.
However Min Bahadur Shrestha and Sashi Kant Chaudhary do not analysis how inflation can
impacted consumption pattern and purchasing power of people.
17

26. According to P. Maneesh Shaharban ,
Although people are different in terms of their need, consumption pattern, food position and
taste, change in food price affect entire household. Hardship of the poor people increases because
they have to spend a larger share of their income on essential foods and less is left to spend on
other purposes.
Since the population below poverty line spends more of their expenditure on food. Impact of
food price rise is severe on the poor section of population.
Inflation erades the purchasing power of households, especially those with fixed income groups.
Many who were poor before the price increases are now in the hunger and malnutrition. These
who were above the poverty lined were slipped back to the poverty line.
The rising trend of food prices has reduced the purchasing power of money and hardly effects
consumption patterns of households.
The consumption pattern of households depends upon number of family members, monthly
income, taste and prerferences availability of goods and so on. Therefore their monthly spending
is not identical.
The income of the households is constant in the short run to meet the growing food expenditure.
As a result household tended to reduce the consumption food articles; Sometimes they stop the
consumption of substantial goods.
Rising food prices are expected to affect the welfare and standard of living of the poor people.
They have stopped on the consumption of certain group of food items, especially fruits.
On the consumer side, as food price increase the monetary coast of achieving a fixed
consumption basket increases hence reducing consumer’s welfare.
18

27. Inflation badly affect the low and middle class people and their standard of living and
consumption. Inflation in food is enemy of poor household. Poor people have to fight everyday
for their survival and cost of living is high. Food Inflation indicates higher prices of agricultural
products.
Inflation has made significant impact on various food items especially on rice.
The increasing price level have limited the purchasing power of households a force the
households to start cultivation.
Food inflation is the most severe social as well as economic problem that affects everyone.
The impact of inflation on household consumption is very high. About 72 percent of rural
households spend more than 50 percent of income on food. The increase in the average monthly
households expenditure is less than proportionate to the increase in the average monthly food
expenses. As a result the households have tried to cut costs of consumption. Price hike can also
limit the ability of poor households to meet their non-food expenses such as education and health
care. The increased food prices has compelled more than 50 percent of income for consumption
and left a little for saving or erodes saving of the households. The main impact of food inflation
is increasing the depth of poverty in those who are already poor rather the pushed number of
people newly into poverty line.
It is limited to Kerela Kanpur district. The study may different in other region.
Accoding to Janey machika November 2023
Inflation the rise in the general price level of goods and services overtime, can have far reaching
effects on various aspects of our lives. One major aspects of inflation can significantly impacts
their livelihoods.
19

28. Inflation can affects the lives of farmers also.
Inflation increases the input costs. Inflation leads to higher prices for essential inputs like seeds,
fertilizer, pesticides and fuel.
Farmers rely on these inputs to cultivate their crops, and when prices rise it directly affects their
production costs.
As a results maintaining profitability becomes increasingly challenging.
Inflation can reduced real income . One major effects of inflation is that it erodes the purchasing
power of money. When the cost of living rises faster than farmers incomes they find it harder to
afford the necessities. This makes it difficult for them to maintain a decent standard of living and
invest in their farmer.
Inflation also causes uncertainity in Pricing. Inflation can lead to price volatility in the
agricultural market. Fluctuating prices for crops and livestock can create uncertainity for farmers,
making it harder for them to plan for the future and invest in their operation.
Inflation means less money to buy the farm inputs and to employ form works which in turn
means less is produced and sold at a high price.
Inflation can also affect as debt burden for farmers
Many farmers rely on loans to finance their operations. As inflation reduces the value of money,
repaying these loans becomes more onerous, potentially leading to a cycle of debt and financial
instability.
20

29. According to Kasirajan .A 2017,
Inflation which is international in its character occurs due to an imbalance between demand for
and supply of money, changes in production, distribution cost, increase in taxes and other factor.
Inflation arises out of continuous increase in the price level of goods and services which results
in full in the value of money that is reduction in the purchasing power of money.
The effects of inflation on households is severe, as the prices of necessities have gone beyond
their purchasing power. As a result they resort to loans to satisfy their needs, which directly
influence their family budget. Inflation tends to distribute income and wealth away from wage
earning classes who are the household or consuming sector. Inflation does not affect everyone in
a uniform manner. The distributional impact of inflation will be linked to its underlying causes,
which may be different in various places and times.
The determinants of the economic status of the economic status of a society as per capital income
, level of consumption, etc.
While the increase in per capital income and per capita income and per capital consumption
expenditure are some of the macro level indicators of development, the distribution of household
expenditure is a micro level indicator. Household is distinctly identified unit of consumption of
goods and services and the measure of household consumption expenditure is the single most
significant indicator of access of households to the basket of goods and services, their level of
living and economic wellbeing. Household consumption expenditure is the expenditure is the
expenditure incurred by the households in the consumption of goods and services that is, on
goods and services used for the direct satisfaction of individual needs and wants or the collective
needs of members of the community and not for further transformation in production.
Many factors can influence households consumption expenditure, in which natural resources
endowments, physical and climatic conditions economic factors like income price and the extent
of magnetization demographic factors like tastes and preference, family size, age of family
members, geographic location shopping behaviour and lifestyle choices etc. are very important.
Such diverse socioeconomic, demographic and cultural factors are reflected in the inequality in
the distribution of consumption expenditure in India. But in determining households expenditure
income is an important variable.
21

30. However, the prices that households face are critical in translating nominal income into specific
utility or standard of living, therefore price over time, given a specific income level, will
positively or negatively impact on standard of living of the different income category households
. Inflation varies across households due to different spending patterns.
The impact of inflation is especially quite severe on the poor and low income households, as
their income is not inflation- indexed. This section of the household sector is pushed further deep
into poverty, since they spend all their income only on necessaries and thus they are worse off
post- inflation.
There is another section of the households sector, whose income is inflation – indexed which is
mostly comprised of the middle income and thus, they are neither worse-off or nor better-off
during post inflation period.
However, the rich or the high income households, which comprise mostly of the business,
producing and investing segment are had in fact better off during post inflation period even
though their income too is not inflation- indexed. This is not only indicates worsening of income
inequality in the economy, but more importantly, the differing nature and extent of impact of
inflation on the different segments of the society. This is the outcomes of discrepancies in the
nature of commodities in a households consumption basket.
When the proportion of commodities with higher inflation dominates the consumption basket of
a particular household, then impact of inflation will be higher and vice-versa.
According to Laxman Kafle 2022 June
Increasing prices of goods and services have been a global phenomenon in recent months
especially after russia disaster invasions of Ukraine and the counter response of the western allies
against Russia in the form of economic sanctions.
22

31. Rising prices naturally reduce people’s savings and increase investment uncertainity. High
inflation tends to worsen inequality or poverty because it hits incomes and savings of poor -or
middle income households more than wealthy households. Households that recently escaped
from poverty could be pushed back into it because of rising inflation.
2.2 Conclusion
Inflation is kind of unhealthy in economy. inflation makes economy suffers. However we cant
ignore the change. The price of commodity 30 years and the price of same commodity now is not
the same. Such rise in price is acceptable but it is not a inflation. And if we see the people living
standard it is also changing people are becoming wealthier, the definition of poverty is also
changing. Nowadays poverty is not only deprivation from basic needs , people are consider poor
even if they don’t have T.V , Vehicles.
Inflation is good so long as if is well under control and increases output and employment. It
becomes harmful once it goes out of control and takes no account of the basic principle of social
equality. According to C.N. Vakil, "Inflation may be compared to robber. Both deprive the
victim of some possession with the difference that robber is visible, inflation is invisible; the
robber's victim may be one or few at a time, the victim of inflation is the whole nation, the
robber may be dragged to a court of law, inflation is legal." Inflation has wide-ranging influence
on economic, social, moral and political life of the country.
If prices of all goods and services increases in the same proportion, such inflation may leave the
economic agent unaffected, unless these changes affected the economy's output and the rate at
which the output grew.
Inflation has various effects some of them are:
Commodity market is in equilibrium when aggregate demand is equal to the aggregate supply. It
is determined by the interaction of Aggregate Demand and Aggregate Supply curve. The
components of aggregate demand and aggregate supply curve are as usual. In the commodity
market, a change in the supply of goods and services in the short run is explained along the
23

32. supply curve. But in the long-run when aggregate supply changes, it is expected by the shift of
aggregate supply curve.
It effects on Wage and Salary Earners:
Wage and salary earners usually suffer during inflation because a) wages and salaries do not rise
in the same proportion in which the prices or the cost of living rises and formed trade unions,
stand to loss less than those who are unorganized.
It effects on Fixed Income Groups:
The fixed- income groups are the worst sufferers during inflation. Persons who live on past
saving, investment pensioners, interest and rent earners suffer during period of rising prices
because their incomes remain fixed.
It effects on Investors:
The effect of inflation on investors depends on in which asset the money is invested. If the
investors invest their money in equities, they are gainers because of rise in profit. If the investors
invest their money in debentures and fixed income bearing securities bond. etc, they are the loser
because income remains fixed.
It effects on Farmers:
Farmers generally gain during inflation because the prices of the farm product increases faster
than the cost of production, thus leading to higher profit during
It creates Hoarding and Black-marketing:
To profit from rising prices, the producers produce board and black-market.
It Reduce Saving:
Inflation adversely affects saving and capital accumulation. When price increases, the purchasing
power of money falls which means more money is required to buy the same quantity of goods.
This reduces savings.
24

33. Although Nepal is directly affected by Indian inflation. Some of the important
determinants of inflation in Nepal are:
Indian inflation: A major determinant of inflation in the long run and a significant influence in
the short run
Exchange rate: A major determinant of inflation in the long run and has a positive correlation
with inflation
Broad money supply: A main driver of inflation and has a positive correlation with inflation
Budget deficit: A main driver of inflation and causes inflation in the short run
Real income: A major determinant of inflation in the long run
Wages: A rise in wages in the industrial sector causes national inflation
Inflation expectations: There is a significant relationship between inflation and inflation
expectations in Nepal
Measures against inflation can be divided into
Monetary Policy
Fiscal Policy
Direct Control
Other measures
25

34. CHAPTER:THREE
Research Methodology
3.1Research design:
A research design is the blueprint used to guide a research study towards its objectives. The
research design is the process of arriving to the solution of the problem through planned and
systematic dealing with the collection analysis and interpretation of facts and figure. The
proposed study of inflation and its impacts on livelihood is adopting both primary data and
secondary data.
3.2 Sources of Data
The proposed thesis will be based on the both primary and secondary data. For primary data qualitative
analysis method will be used. For secondary data quantitative danalysis is used.
3.2.1 Primary data:
Primary data are mainly collected by a resources to address the research problem.In otherwords, there are
not readily available from various sources, rather the researcher has to systematically collect the data
relevant to a pre specified research problem. The importance of primary data is unquestionable. For
primary data questionnaire tools will be used.
Questionaire: Questionnaire is a written list of questions the answers to which are recorded by
respondent. In a questionnaire respondents read the questions interpret what is expected and then
write down the answers. Questionaire will be administered in different ways such as a students in
classroom and public places such as a shopping center.
3.2..2 Secondary data :
Secondary data are the data that have already been collected by someone else before the current needs of
a researcher. The present researcher only uses these data with related references and never collects it from
the field. When compared with the primary data, secondary data can be collected easily with time and
cost efficiency. Secondary data are readily available and provide a base to tackle the research problem.
26

35. For secondary data books, Periodicals, Published materials, different websites will be used. Proposed
research paper will take references of many available data sources.
Different statistics tools like, average, percentages and line graph and correlation analysis will be used.
Trend line was used to study. MS Excel and SPSS will be used for this purpose.
3.3 Sampling `
Sampling is the process of selecting a few from a bigger group to become the basis for estimating or
producing the prevalence of an unknown piece of information situation or outcome regarding the bigger
group. Population refers to the total of items about which information is desired. Sample is a subgroup
that is choosen which is believed to be representative of population and the method of choosing this sub
group is done by sampling.
Sampling is essential because
Sampling saves time
Sampling saves Money
Sampling boardens the scope of the study in light of scarcity of resources.
Sampling minimizes the destruction.
Sampling provides the more accurate results.
For sampling the proposed research will take random sampling methods.
3.3.1 Random Sampling: In random sampling it is that each element in the population has an equal
and independent chance of selection I the sample.
For random sampling proposed research study will take simple random sampling method.
3.3.2 Simple Random Sampling: In simple random sampling each element in the population
has an equal chance of being selected.
3.4 Study Population
For primary data collection following population will be studied:
Children, Adolescents, men, women, elderly, adults will be studied.
Population will be selected from Chandagiri kathmandu area.
27

36. 3.5 Sampling Size
For primary data Sample size will be 45 sample.
For secondary data sample size will be 20-25 yearly bulletin.
28

37. CHAPTER: FOUR
DATA ANALYSIS
Data analysis is a core part of the study. In this section data which are received are analyzed
according to the requirement. In this section impact of inflation on livelihood are analyzed.
Impact of inflation on food sector, non food sector and mental health are analyzed. In this
section impact on different income groups are analyzed. In this the past record of inflation are
also analyzed. The major analysis are discussed below:
4.1 Past Analysis
Figure 4.1 Past Analysis
29

38. The inflation rate in 2000 is 5.9. The inflation rate 2001 is 6.2. The inflation rate in FY 2002 is
3.03. The inflation rate in FY 2003 is 5.71. The inflation rate in FY 2004 2.7T the inflation rate
in FY 2005 is 6.4. The inflation rate in fiscal year 2006 is 6.4. The inflation rate in FY 2007is 6.5
the inflation rate in FY 2008 is 13.3. The inflation rate in 2009 is 11. The inflation in FY 2010 is
7.9. The inflation rate in FY 2011 is 9.6. The inflation rate in FY 2012 is 9.46. The inflation rate
in FY is 2013 is9.9. The inflation rate FY 2014 is 8.46. The inflation rate in FY 2015 is 9.9. The
inflation rate in FY 2016 is 8.8. The inflation rate in FY 2017 is 3.6. The inflation rate in
FY2018 is 4.1. The inflation rate in FY2019 is 5.6. The inflation rate in FY2020 is 5.1. The
inflation rate in FY 2021 is 4.1. The inflation rate in FY 2022 is 7.7 T he inflation rate in FY
2023 is 7.1.
The inflation rate is high in 2008. The main reason for inflation in 2008 are Political instability,
Global fuel price shock, Increase in price of food and commodity, supply side disruption and
increase increase in international price in imported goods and Indian inflation.
The main reason for inflation of FY 2013 are low production in agriculture and industrial sector,
Increase in fuel price, political instability and increase in price of imported goods.
The main reason of inflation 2022 are Russsia- Ukraine War, Rising fuel prices, Covid 19
pandemic and also a local election.
30

39. 4.2 The impact of inflation on food prices:
4.2.1 Impact on Cereals, Pulses Vegetables, Meat and Fish:
Figure 4.2.1 Impact on cereals, pulses, vegetables meat/fish
During inflation 2022 from July2022 to July 2023 Nepal food prices were affected. So cereals
Pulses Vegetables and meat and fish are also affected. Cereals are important food items of
Nepali. Nepalese almost depend upon on cereals. Cereals are imported from India. Since it is
imported it is much affected. During July/ Aug cereals inflation rate is 5.28. During Aug/Sep
cereals were 7.23. During Sep/Oct inflation rate of cereals were 8.19. During Oct/N inflation rate
of cereals were 9.19. During Nov/Dec inflation rate of cereals were 9.39.During Dec/Jan
inflation rate of cereals were 9.56. During Jan/ Feb inflation rate of cereals is 12.39.During
Feb/Mar inflation rate is14.35. During Mar/Apr inflation rate was 13.72. During Apr/May
inflation rate is 13.69. During May/Jun Inflation rate is 13.06. During Jun/Jul inflation rate is
12.79.Overall cereals inflation rate is rising from Jul/Aug to 2022- Jun/Jul 2023.
Pulses are also important food item for Nepali. Almost every Nepali consume it daily. Pulses are
imported from India and also from Canada and Australia. It is imported it is affected. During
Jul/Aug pulses inflation rate is8.85 During Aug/sep pulses inflation rate is8.30. During Sep/Oct
pulses inflation rate is5.98 .During Oct/Nov pulses inflation rate is4.47 During Nov/Dec inflation
31

40. rate of pulses is4.88. During Dec/Jan Inflation rate of pulses is4.46 During Jan/Feb inflation of
pulses is4.64 During Feb/Mar inflation rate of pulses is 3.72 During Mar/Apr inflation rate of
pulses is 3.06 During Apr/May inflation rate is1.76 During May/ Jun inflation rate is1.25 During
Jun/JUL inflation rate of pulses is 3.14. Overall pulses inflation rate rises first two month then
slowly it fall to 1.25 on may/jun but last Jun/jul it rise to 3.14.
Vegetables are also important food item of Nepali. But since it can produce and supply within
own country it is not too much affected. Majority of vegetables are sources of Domestic
production though some are imported from India. So it is not too much affected. During Jul/Aug
Inflation rate of Vegetables is 5.56. During Aug/Sep the inflation rate of vegetable is9.94. During
Sep/Oct the inflation rate of vegetables is3.62. During Oct/Nov inflation rate of vegetables is -
2.27. During Nov/Dec inflation rate of vegetables is -8.28. During Dec/ Jan Inflation rate of
vegetables is -7.99 .During Jan/Feb inflation rate of vegetables is-5.75. During Feb/Mar inflation
rate of vegetables is -8.80. During Mar/apr Inflation rate of vegetables is 1.40. During Apr/may
inflation rate of vegetables is -1.90. During May/ June inflation rate of vegetables is 0.23.
During Jun/Jul inflation rate of vegetables is 5.71. Overall at Aug/Sep it has highest rate 9.94.
Meats and Fish are imported from china and Thailand and Japan but meat is also an agricultural
product it is an internal sources as well as imported so we can see not too much affect on meat
and fish. During Jul/Aug the inflation rate of Meat and fish is -0.81. During Aug/Sep the
inflation rate is1.51. During Sep/Oct the inflation rate of meat and fish is7.06. During Oct/Nov
the inflation rate of meat and fish is8.22. During Nov/Dec the inflation rate of meat and fish
is5.34. During Dec/Jan the inflation rate of meat and fish is3.86. During Jan/Feb the inflation
rate of meat and fish is 2.90. During Feb/mar the inflation rate of meat and fish is3.67. During
Mar/Apr the inflation rate of meat and fish is 0.73. During Apr/May the inflation rate of meat
and fish is -0.41. During May/Jun the inflation rate of meat and fish is0.10. During Jun/Jul the
inflation rate of meat and fish is 5.5. Overall from 2022 Jul/Aug- 2023 June/Jul the inflation rate
is in average.
32

41. 4.2.2 Impact on Milk product/Egg, Ghee/oil, Fruit and Sugar:
Figure 4.2.2 Impact on milkproduct/egg, ghee/oil, Fruit and Sugar
India is primary sources of milk product and egg for Nepal. It is much affected by inflation.
During Jul/Aug the inflation rate of Milk product and egg is10.19. During Aug/Sep the inflation
rate of Mil k product and egg is 9.68. During Sep/Oct the inflation rate of Milk product and egg
is9.45. During Oct/Nov the is 9.33. During Nov/Dec the inflation rate of Milk product and egg
is 9.07. During Dec/Jan the inflation rate of Milk product and egg is 9.70. During Jan/Feb the
inflation rate of Milk product and egg is 5.36. During Feb/Mar the inflation rate of Milk product
and egg is 4.76. During Mar/Apr the inflation rate of Milk product and egg is 10.36. During
Apr/May the inflation rate of Milk product and egg is 10.41. During May/Jun the inflation rate of
Milk product and egg is 10.98. During June/Jul the inflation rate of Milk product and egg is
11.65. Overall inflation rate of Milk product and egg is rising but if we see Jan/Feb and Feb/Mar
it is in middle.
Nepal import Ghee and oil mainly from India. And it is also low tariff and zero tariff and
sometimes Nepal import oil and proceed it and re export to India. So sources of Ghee and oil is
both domestic and India. During Jul/Aug inflation rate of Ghee/Oil is 19.58. During Aug/Sep
33

42. inflation rate of Ghee/Oil is 14.53. During Sep/Oct inflation rate of Ghee/Oil is7.89. During
Oct/Nov inflation rate of Ghee/Oil is 8.10. . During Nov/Dec inflation rate of Ghee/Oil is 7.06.
During Dec/Jan inflation rate of Ghee/Oil is 6.59. During Jan/Feb inflation rate of Ghee/Oil is
4.44. During Feb/Mar inflation rate of Ghee/Oil is -3.71. During Mar/Apr inflation rate of
Ghee/Oil is -8.1. During Apr/May inflation rate of Ghee/Oil is-14.44. During May/Jun inflation
rate of Ghee/Oil is -16.60. During Jun/Jul inflation rate of Ghee/Oil is-16.48. Overall inflation is
rising at first two month and it is diminishing.
Fruits are imported from India. Fruits including mangoes banana oranges and apples are
imported from I ndia where as china also major export of fruits to Nepal.
During Jul/Aug inflation rate of Fruit is 18.79. During Aug/Sep inflation rate of Fruit is 17.29.
During Sep/Oct inflation rate of Fruit is 12.06. During Oct/Nov inflation rate of Fruit is 6.80.
During Nov/Dec inflation rate of Fruit is 4.03. During Dec/Jan inflation rate of Fruit is
1.79.During Jan/Feb inflation rate of Fruit is 7.87. During Feb/Mar inflation rate of Fruit is 7.93.
During Mar/Apr inflation rate of Fruit is 11.00 .During Apr/May inflation rate of Fruit is 1.47.
During May/Jun inflation rate of Fruit is 0.46. During June/Jul inflation rate of Fruit is 0.72.
Overall fruits has highest and second highest inflation rate in Jul/Aug and Aug/Sep respectively.
Nepal import sugar from India, Pakisthan and Thailand. During Jul/Aug inflation rate of sugar is
7.74. During Aug/Sep inflation rate of sugar is7.16. During Sep/Oct inflation rate of sugar is7.17.
During Oct/Nov inflation rate of sugar is 8.06. During Nov/Dec inflation rate of sugar is 6.82.
During Dec/Jan inflation rate of sugar is 6.79. During Jan/Feb inflation rate of sugar is 6.83.
During Feb/Mar inflation rate of sugar is 5.95. During Mar/Apr inflation rate of sugar is 5.53.
During Apr/May inflation rate of sugar is 4.72 During May/Jun inflation rate of sugar is3.20
During Jun/Jul inflation rate of sugar is 3.86. Overall inflation rate of sugar is increasing at the
beginning and it decline at the end.
34

43. 4.2.3 Impact on Spices, alcoholic, non alcoholic and tobacco product :
Figure 4.2.3 Impact on spices, alcoholic non alcoholic and tobacco product
Nepal imported spices from India. During Jul/Aug the inflation rate spices is-0.99. During
Aug/Sep the inflation rate of spices is 1.05. During Sep/Oct the inflation rate of spices is 5.08.
During Oct/Nov the inflation rate of spices is 5.39. During Nov/Dec the inflation rate of spices
is 5.41. During Dec/Jan the inflation rate of spices is 5.44.During Jan/Feb the inflation rate of
spices is 8.04 During Feb/Mar the inflation rate of spices is10.88. During Mar/Apr the inflation
rate of spices is 14.67 During Apr/May the inflation rate of spices is 26.61. During May/Jun the
inflation rate of spices is 35.29 During Jun/Jul the inflation rate of spices is 41.97 . Overall
during 2022 Jul/Aug -2023 Jun/Jul Inflation rate of spices are increasing from -0.99 to 41.97.
Nepal import non alcoholic drinks from India, China and Thailand.
During Jul/Aug inflation rate of Non alcoholic drinks is 7.98. During Aug/Sep inflation rate of
Non alcoholic drinks is 8.32. During Sep/Oct inflation rate of Non alcoholic drinks is 8.22.
35

44. During Oct/Nov inflation rate of Non alcoholic drinks is 6.26. During Nov/Dec inflation rate of
Non alcoholic drinks is 6.30. During Dec/Jan inflation rate of Non alcoholic drinks is6.62.
During Jan/Feb inflation rate of Non alcoholic drinks is7.07 During Feb/Mar inflation rate of
Non alcoholic drinks is7.17 During Mar/Apr inflation rate of Non alcoholic drinks is 6.89.
During Apr/May inflation rate of Non alcoholic drinks is 6.59 During May/Jun inflation rate of
Non alcoholic drinks is 6.07 During Jun/Jul inflation rate of Non alcoholic drinks is 5.09.
Overall non alcoholic is increasing, decreasing then increasing and decreasing trends between
2022Jul/Aug- 2023 Jun/Jul.
Nepal import alcoholic drinks from Singapore and UAE.
During Jul/Aug, Aug/Sep and Sep/Oct Inflation rate of alcoholic drinks is10.24. During Oct/Nov
Nov/Dec and Dec/Jan Inflation rate of alcoholic drinks is 8.84. During Jan/Feb, Feb/Mar and
Mar/Apr Inflation rate of alcoholic drinks is8.78 During Apr/May, May/Jun and Jun/Jul
Inflation rate of alcoholic drinks is 6.48 .Overall the inflation rate is increasing first but after 3
months it is slowly decreasing. And it is constant every 3 months.
Nepal imported tobacco from India. During Jul/Aug, Aug/Sep and Sep/Oct the inflation rate of tobacco
is 8.44. During Oct/Nov, Nov/Dec and Dec/Jan the inflation rate of tobacco is 11.81. During Jan/Feb,
Feb/Mar and Mar/Apr the inflation rate of tobacco is10.83 rate of tobacco is10.83. During Apr/May,
May/Jun and Jun/Jul the inflation rate of tobacco is 8.49.
Overall the inflation rate of tobacco ranges from 2022Jul/Aug -2023 Jun/Jul is increasing and it
is stable every 3 month.
36

45. 4.3 Impact of inflation on Non-food and service sector:
4.3.1Impact on Clothes and Footwear:
Figure 4.3.1 Impact on clothes and footwear
Nepal imports for clothing and footwear. Its price increases. Increase in the price of domestic
factors like raw materials and labour cost also contribute inflation. It impact various sector also
impact on consumer spending occasion like dashain.
During Jul/Aug , Aug/Sep and Sep/Oct the inflation rate of clothes and footwear is7.68. During
Oct/Nov,Nov/Dec and Dec/Jan the inflation rate of clothes and footwear is 6.43. During Jan/Feb,
Feb/Mar and Mar/Apr the inflation rate of clothes and footwear is 7.03. During Apr/May,
May/Jun and Jun/Jul the inflation rate of clothes and footwear is 6.38.
Overall the inflation rate is high in beginning and decline at mid and slightly increase but decline
at end showing hope inflation will be controlled in near future.
37

46. 4.3.2 Impact on Housing and utilities:
Figure 4.3.2: Impact on housing and utilities
Housing and utilities is also impacted by Inflation 2022. Impact on housing and utilities there is
rise in the cost of rent, utilities like electricity and water. The rise in fuel price led to rise in
housing and utilities. Its impact Nepalese people and increase the living expenses.
During Jul/Aug the inflation rate of housing and utilities is 7.86. During Aug/Sep the inflation
rate of housing and utilities is 7.69. During Sep/Oct the inflation rate of housing and utilities is
7.68. During Oct/Nov the inflation rate of housing and utilities is 8.49. During Nov/Dec the
inflation rate of housing and utilities is 8.29. During Dec/Jan the inflation rate of housing and
utilities is 8.29. During Jan/Feb the inflation rate of housing and utilities is 9.78. During Feb/Mar
the inflation rate of housing and utilities is 9.72. During Mar/Apr the inflation rate of housing
and utilities is 9.54. During Apr/May the inflation rate of housing and utilities is 9.65. During
May/Jun the inflation rate of housing and utilities is 8.41. During Jun/Jul the inflation rate of
housing and utilities is 8.37.
38

47. Overall inflation is rising though it is slightly low at the end.
4.3.3 Impact on Furnishing and household equipment
Figure 4.3.3 Impact on furnishing and household equipment
Nepal is import dependency and it import furnishing and household equipment too especially
from India. Nepalese people reduced spending in this sector and switch to cheaper alternatives.
During Jul/Aug the inflation rate of Furnishing and household equipment is 9.04. During
Aug/Sep the inflation rate of Furnishing and household equipment is 9.25. During Sep/Oct the
inflation rate of Furnishing and household equipment is 9.45. During Oct/Nov the inflation rate
of Furnishing and household equipment is 8.33. During Nov/Dec the inflation rate of Furnishing
and household equipment is 8.29. During Dec/Jan the inflation rate of Furnishing and household
equipment is 8.33. During Jan/Feb the inflation rate of Furnishing and household equipment is
9.00. During Feb/Mar the inflation rate of Furnishing and household equipment is 8.79. During
Mar/Apr the inflation rate of Furnishing and household equipment is 8.74. During Apr/May the
inflation rate of Furnishing and household equipment is 8.27. During May/Jun the inflation rate
of Furnishing and household equipment is 7.83. During Jun/Jul the inflation rate of Furnishing
39

48. and household equipment is 7.84. Overall Furnishing and household equipments has high
inflation rate in Sep/Oct.
4.3.4 Impact on Health Sector
Figure 4.3.4 Impact on health sector
Nepal faced increased cost in medical supplies. Nepal has to imported medical equipments,
medicine, and other essential supplies. It led to higher cost to hospital and health care. Increased
in fuel prices due to Russia-Ukraine war which also contributed inflation in Nepal become
difficult for transportation and health facilities. Patient felt they couldn’t afford.
During Jul/Aug, Aug/Sep and Sep/Oct the inflation rate of health is 10.54. During Oct/Nov,
Nov/Dec and Dec/Jan the inflation rate of health is 11.22. During Jan/Feb , Feb/Mar and
Mar/Apr the inflation rate of health is 10.39.During Apr/May, May/Jun and Jun/Jul the inflation
rate of health sector is 7.92.
Overall the inflation in health sector is rising and it shows constant rate for three months.
40

49. 4.3.5 Impact on Transportation sector :
Figure 4.3.5 Impact on transportation sector
The inflation 2022 impact on transportation sector. It increase in the price of petrol, diesel and
LPG. Petrol rises by 43%. Diesel rises by 57% and LPG rises by 14%. The bus fare increases
taxi fare increases public bus fare increases. The rise of transportation cost raises supply chain
disruption. It impact on travel cost of imported goods and services.
During Jul/Aug the inflation rate of transportation sector is 23.88. During Aug/Sep the inflation
rate of transportation sector is 23.41. During Sep/Oct the inflation rate of transportation sector
is21.55. During Oct/Nov the inflation rate of transportation sector is 17.71 During Nov/Dec the
inflation rate of transportation sector is 17.33. During Dec/Jan the inflation rate of transportation
sector is16.43. During Jan/Feb the inflation rate of transportation sector is 15.58. During
Feb/Mar the inflation rate of transportation sector is13.23. During Mar/Apr the inflation rate of
transportation sector is 8.29 During Apr/may the inflation rate of transportation sector is 7.01.
During May/Jun the inflation rate of transportation sector is2.23. During Jun/Jul the inflation
41

50. rate of transportation sector is -1.05. Overall inflation rate of transportation is highest in Jul/Aug
with 23.88.
4.3.6 Impact on communication Sector
Figure 4.3.6 Impact on communication sector
Inflation don’t left communication sector of Nepal to be impacted. It challenges consumer to
afford expensive communication services. Nepal is import based country so rising global prices
for goods and services also increases price of technology and equipment used in the
communication sector.
During Jul/Aug ,Aug/Sep and Sep/Oct the inflation rate of communication is 1.61, During
Oct/Nov, Nov/dec and Dec/jan the inflation rate of communication is 0.70. During Jan/Feb,
Feb/Mar and Mar/Apr the inflation rate of communication is 1.41. During Apr/May, May/Jun
and Jun/Jul the inflation rate of communication is 1.66. Overall the inflation rate of
communication is rising and for some months it show it is stable.
42

51. 4.3.7 Impact on recreation and culture
Figure 4.3.7 Impact on recreation and culture
The inflation 2022 in Nepal led to rise in price of recreation and culture services like other sector
it further led to reduced spending by consumers.
During Jul/Aug the inflation rate recreation and culture is 2.46. During Aug/Sep the inflation
rate recreation and culture is 7.58. During Sep/Oct the inflation rate recreation and culture is
7.58. During Oct/Nov , Nov/Dec and Dec/Jan the inflation rate recreation and culture is 8.76.
During Jan/Feb, Feb/Mar and Mar/Apr the inflation rate recreation and culture is 8.81. During
Apr/May May/Jun and Jun/Jul the inflation rate recreation and culture is15.75.
Overall it shows the inflation rate of recreation and culture increasing.
43

52. 4.3.8 Impact on Education
Figure 4.3.8 Impact on educaton
Inflation 2022 don’t left education to be impacted. It led to increased in the cost of textbooks,
school supplies, transportation for both private and public schools. Families faced difficulties in
affording even basic educational needs . it led to increased in dropout rates and it led to hindering
educational access.
During Jul/Aug Aug/Sep and Sep/Oct the inflation rate of Education is 8.11. During Oct/Nov,
Nov/Dec and Dec/Jan the inflation rate of Education is 7.85. During Jan/Feb, Feb/Mar and
Mar/Apr the inflation rate of Education 8.67. During Apr/May , May/ Jun jun/Jul the inflation
rate of Education is 10.56.
Overall inflation rate of education is rising though it remain stable for three month for one time.
44

53. 4.4 Impacted in the perception and mental health of teenager:
4.4.1 Impact on Daily expenses:
Figure 4.4.1 Impact on daily expenses
About 82% of male have experienced increased in their daily expenses during inflation. About
76% female have experienced increased in their daily expenses during inflation. About 19% of
female has no impact and about 9% of male have no impact. About 9.5% of male have
experienced decreased in their expenses during inflation. About 9% of female have experienced
decreased in their daily expenses.
Overall both male and female experience increase in expenses during inflation.
45

54. 4.4.2 Impact on academic performance:
Figure 4.4.4 Impact on academic performance
About 64% of female are not sure that inflation impact on their academic performance. About
53% of male are not sure inflation impact on their academic performance. About 25% of female
agree inflation impact on their academic performance. About 33% of male agree inflation impact
on their academic performances. About 13% of female disagree inflation impact on their
academic performances. About 14% of male disagree inflation impact on their academic
performances.
Impact of inflation on academic performance is majority in not sure. They are not aware of how
inflation impact on academic performance.
46

55. 4.4.3 Impact on sports:
Figure 4.4.3 Impact on sports
About 50% of female are not sure inflation impact on their sports participation. About 30% of
male are not sure inflation impact on their sports participation. About 38% of female don’t agree
inflation impact on their sports participation. About 33% male don’t agree inflation impact on
their sports participation. About 12% of female agree inflation impact on sports participation.
About 37% male agree inflation impact on their sports participation.
Inflation Impacts less on Sports. So data reflect that inflation impact less on Sports participation.
47

56. 4.4.4 Impact on Entertainment:
Figure 4.4.4 Impact on entertaiment
About 67% of female don’t agree inflation impact on their entertainment. About73% don’t agree
inflation impact on their entertainment. About 30% of female are not sure inflation impact on
their entertainment. About 13% of male are not sure inflation impact on the entertainment. About
13% percent of male agree inflation impact on entertainment.
Overall girls don’t agree inflation impact on entertainment.
48

57. 4.4.5 Impact on parents
Figure 4.4.5 Impact on Parents
About 70% of male agree inflation impact on their parents. About 50% female agree inflation
impact on their parents. About 20% of male aren’t sure inflation impact on their parents. About
50 % female aren’t sure inflation impact on their parents. About 10% male agree inflation
impact on their parents.
Overall both male and female agree that their parents has impacted by inflation.
49

58. 4.4.6 Impact on mental health:
Figure 4.4.6 Impact on mental health
About 62% of female have other option on mental health. About of53% male have other option
in mental health.
About of37% female have experienced stress. About of male experienced stress. About 17% of
male have experienced anxiety.
Both male and female choose other option more showing that they fell less mental pressure
during inflation. But it looks like they don’t express exactly.
50

59. 4.4.7 Impact on habit
Figure4.4.7 Impact on Habit
About 80% of female save during inflation about of 83% male save during inflation. About 19% of female
spend during inflation. About 7% of male spend during inflation. Overall both male and female save
during inflation.
51

60. 4.4.8 Impact on expenses:
Figure 4.4.8 Impact on expenses
About of 2% male experienced difficulties in clothing. About of10% male experienced
difficulties in eating out. About of 6% male experienced diificulties in entertainment. About of
male have difficulties in travel and about of female have difficulties in travel. About of 51%
male choose difficulties in travel and about 93%female choose difficulties in travel. About of
30% male choose others option. About 6% of female choose other option. Overall both male and
female face difficulties in travel during inflation.
52

61. 4.4.9 Perception on getting part time job
Among 16 females 6 girls are willing to get part time job during inflation. Only 4 girls are not
willing to get part time jobs during inflation. And 6 girls are not sure about getting part time job
during inflation.
Among 30 males 10 boys are willing to get part time job. 9 boys are not sure about getting part
time job. Whereas 11 boys are not willing to get part time job.
4.4.10 Perception government should take step to control inflation.
Among 16 females 14 girls agree on government should take step to control the inflation. Where
as 2 girls are not sure government should take step to control the inflation.
Among 30 males agree on government should take step to control the inflation. Whereas 3 male
aren’t sure government should take step to control the inflation.
4.4.11Perception on relax/Panic
Among 16 females 7 girls panic during inflation. Where as 8 girls say there are still child and
don’t panic during inflation they relax during inflation.
Among 30 boys 13 boys panic during inflation. Where as 17 boys say there are still chills and
don’t panic during inflation they relax during inflation.
4.4.12 Perception how schools and educational institutions support student
during inflation.
Among 16 females 8 girls say schools and campuses support their student during inflation by not
increasing tuition fees. 3 girls say schools and campuses can decrease their fees to show support
to their students. 3 girls say schools and campuses can provide books and copies for free to show
53

62. support during inflation. 2 girls say schools and campuses can provide mental support during
inflation to support their students.
Among 30 males 5 boys say schools and campuses can provide mental support during inflation.
9 boys said schools and campuses can decrease schools fees to support student during inflation. 3
boys say schools shouldn’t increase schools and campuses fees during inflation to support
inflation. 1 boy said schools and campuses can provide couselling. 6 boys say schools and
campuses can provide advice how to spend money to support them during inflation. 3 boys say
providing free education and supplies can support them during inflation. 1 boy say creating
awareness can support them during inflation. 1 boy say providing better education can support
them during inflation. 1 boy say providing free education can support them during inflation.
4.5 Impacts of inflation on different income groups
4.5.1 Impact of inflation low income group:
Reduced purchasing power: During inflation there is rise in price of goods. So low income group
face reduced in their purchasing power.
Higher vulnerability: Inflation turn normal people to vulnerability.
Disproportianate Burden: Low income group has to spend larger portion of their income in food,
spices, oil etc.
4.5.2 Impact of inflation on middle and high income group:
Impact on saving: Inflation decreased investment and increase saving of these people.
Greater impact to urban resident: Urban people are much affected by inflation than the people
who have access to self produced food.
54

63. Chapter 5
Conclusion and Recommendations:
5.1Conclusion
In this paper we examine the inflation and its impact on livelihood. Nepal experienced inflation
in 2022.
So this paper examine its impact on various sector food sector, non food sector and mental
aspects and different income groups. This paper use both secondary and primary data to analyze
impact of inflation. It uses time series and bar graph percentages.
This paper show that Nepalese suffer in all aspects. They has to suffer price rises from cereals,
pulses, Vegetables, Meat/Fish, Milk product and egg, Ghee/Oil, Fruit, Sugar, Spices, Non
alcoholic drinks ,alcoholic drinks to tobacco. They has to suffer price rises from clothing
footwear, Housing and utilities, Furnishing and household equipments, Health, Transportation,
Communication, Recreation and culture, to Education. They has to suffer in mental aspect also
like they experience price rises in transportation, lowering spending, increase in expenses, lower
in sports participation and entertainment activities, feeling like anxiety and stress, expecting
mental support from schools and colleges and so on.
The result shows that the product that can produce domestically have less impact of inflation and
the product that can’t produce domestically and based on import have more impact of inflation.
Similarly industrial that have imported raw materials have much affected and the industrial that
haven’t imported and those produce domestically have less impact of inflation.
Similarly inflation impact on mental health also. When price increases people has to cut their
spending, they has to isolated, they need mental support, they has to compromise their interest
and they have pay more for transportation expenses.
55

64. Inflation is unhealthy for price stability and economic growth. It appear time to time and its
impact is negative. Although inflation like creeping inflation below 3% are adjustable.
56

65. 5.2 Recommendation
Inflation can be controlled by policies like Monetary Policy, Fiscal Policy, Supply side policy
and Exchange rate policy. Lets discuss supply side policies:
Policy like increasing the economy’s productive capacity which can alleviate the
inflation.
Policy like upgrading transportation, communication and energy networks can boost the
long term productivity and alleviate the inflation.
Policy like increased government spending on education and skills training can improve
the quality of workforce leading to higher productivity can alleviate the inflation.
Policy like reduction some regulations can lower the cost for businesses increase
efficiency can alleviate the inflation.
Policy like lower taxes can incentivize investment and expansion which increases the
productive potential so it can alleviate inflation.
An economy also can control inflation through using Monetary Policy. A central bank can use
the contrationary policy to reduce the money supply and alleviate inflation. Some Monetary
policy are discussed below:
The policy like increasing policy rate can alleviate the inflation.
The policy like using open market operation can alleviate inflation.
The policy like increasing reserve requirement can alleviate inflation.
An economy also can control inflation through Fiscal Policy. A central bank can use
contractionary fiscal policy to alleviate inflation.
The policy like increasing income taxes can alleviate inflation.
The policy like decreasing government spending can alleviate inflation.
The policy like aiming for budget surplus can alleviate inflation.
57

66. An economy can also uses exchange rate policy to alleviate inflation.
Policy like strong domestic currency makes import cheaper and export expensive so it
can also alleviate the poverty.
These are policies to combact inflation but supply side policies will be better to combact
inflation 2022 it is because Nepal is import based country its citizen are suffering most because
rise in the price of goods and services. If we produce of our own and import less then burden of
inflation can reduced. If we increased the productivity and be able to manage our consumption
by our own then burden of inflation can reduced. We aim to export but first we should aim to
fulfill our consumption. Lets produce cereals, pulses ,vegetables, ghee, oil, fruits ,sugar, spices
by our own increase the productivity then we will find inflation will be less burden to Nepalese.
Similarly upgrading communication, transportation ,education and training and skills can also
help to reduce burden of inflation. Moreever inflation not only impact physically it also impact
mentally so providing mental support like counseling can also reduce the burden of inflation
58

67. REFERENCES
Dr. Tara Prashad Bhusal 2023 Statistical Methods Third Edition
Dreamland Publication Pvt.ltd Anamnagar.
Koutsoyiannis, A 1979 Microeconomics Tata Mcgraw Hill publishing
Company Limited
Official website of NRB https://www.nrb.org.np
R.K lekhi and Jogindar shing 2022 Economics for development and
planning Kalyani Publisher
Ranjitkumar 2011 Research Methodology 3
rd
Edition Sage Publication
New Delhi.
William H. Branson Macroeconomics Third Edition East West press
www.federalresevehistory.org
https://shodhganga.inflibnet.ac.in
https://openknowledge.worldbank.org
 https://sanemnet.org
 https://www.nrb.org.np
 https://ideas.repec.org
APPENDIX
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