am Mahat's prospective in-laws had nearly called off the wedding when they found out that the event would go over his budget, after prices of the de rigueur bridal jewellery and catering charges shot up following the pandemic.
The hopeful groom had to take a loan to salvage his marriage plans. In many Nepali communities, the groom's family provides a set of gold jewellery to the bride that now costs in the millions. The engagement is also sealed with a gift of gold ornaments.
Runaway inflation has made life hard for everyone, not only men preparing to whisk away their lady love. From ordinary people to businesses, banks and even the government, all are suffering from the economic crisis that seems to be exacerbating, 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 Rs80,300 per tola on virus jitters. The yellow metal was hovering at Rs75,000 per tola before the Covid-19 pandemic started in Nepal.
On March 9, gold prices broke all records, reaching Rs105,500 per tola in the domestic market in the midst of escalating Russia-Ukraine tensions.
Mahat had originally planned to buy 12 tolas of the precious metal. The price was then in the five digits. But when the cost exploded to six digits, Mahat gasped and decided that his soul mate would have to glitter less.
“We decided to scale down and bought only 8 tolas,” said Mahat. One tola is equal to 11.66 grams.
Ashmi Rasaili, mother of a soon-to-be-bride, has already purchased 5 tolas of gold, and plans to buy another 2 tolas when the price hopefully drops.
"But the price has increased instead," said Netra Rasaili, father of the bride. "Marriage has now become an expensive affair. Marriage without gold is not possible nowadays.”
“I managed the expenses for my elder daughter’s wedding somehow. I am worried about the finances for the marriage of my younger daughter,” said Rasaili, who works for the government.
Last month, the central bank asked banks to halt issuing letters of credit to buy cars, cosmetics, alcohol and gold—which it considers luxury items—in order to prevent foreign exchange reserves from depleting further.
Immediately after the government lifted the second lockdown on September 1, 2021, imports simply surged.
Nepal’s annual import bill crossed the trillion-rupee mark for the first time in the fiscal year 2017-18. Imports soared due to the reconstruction drive in the aftermath of the 2015 earthquakes, and also because Nepalis had more spending money in their pockets after remittance inflows rose.
Three years later, Nepal had spent a trillion rupees in just six months to buy foreign goods as they splurged on things they had always wanted after the devastating Covid-19 pandemic started to wane.
Government statistics show that increased prices of foreign goods is one of the key reasons behind the higher value of imports.
Reports say price gains are shooting higher across many advanced economies as consumer demand, shortages and other pandemic-related factors combine to fuel a burst of inflation.
The looming economic crisis has hit all sectors, even making social events, including wedding functions, costlier.
Suresh Lal Shrestha, proprietor of Berry Banquet at Satdobato, said that the per plate charge in most catering services had increased steeply in just a year or two.
Consumers say that wedding buffets have become so costly that it feels like dining at a five-star hotel. Luxury hotels too have been luring wedding receptions with discount offers as they had remained totally shut for nearly two years, and the events would recharge their revenue flows.
“It costs Rs1,500 to Rs1,600 per plate according to the menu at banquets and party palaces,” said Shrestha, who also operates two other party venues in Samakhusi and Bhaktapur.
"The price of everything has gone up; from food, rent and labour to even water. Among food items, prices of edible oil and vegetables have more than doubled," he said.
"The high prices are discouraging people from holding social functions. There used to be around 500-600 guests at wedding parties before the pandemic. After the pandemic, we don’t see more than 300 guests on an average,” he added.
With people throwing fewer wedding parties, sales of durable consumer goods have also dropped.
“Demand for consumer electronic goods usually jumps during the wedding season. We have been witnessing a constant rise in sales for decades,” said Bishnu Gyawali, deputy general manager of CG Electronics.
“Sales of consumer electronics are not very good nowadays," Gyawali said.
"Single-door refrigerators of 180-190 litre capacity and 32 to 43-inch TVs were the most sought after goods during the wedding season, followed by washing machines of 7-8 kg capacity and other home appliances," he said.
"Prices have gone up so sharply that consumers think twice and thrice before buying anything. All consumer electronic goods have become dearer by around 30 percent as compared to pre-pandemic times."
Traders say that freight charges, which are not under their control, have gone up like anything after the Russian invasion of Ukraine.
According to a World Bank report entitled "South Asia Economic Focus Reshaping Norms: A New Way Forward" released on Wednesday, higher commodity prices in Nepal are spurred by the war in Ukraine.
Transportation prices, construction costs and other consumer prices are rising which will dampen overall demand, the report said.
This may shave Nepal’s economic growth by an estimated 0.2 and 0.6 percentage points in the current fiscal year 2021-22 and the next fiscal year 2022-23 from previous projections, the multilateral funding agency said.
With the Russia-Ukraine war raging, the World Bank has revised Nepal’s growth projection too.
Nepal’s economy, led by recovery of the services sector amid high Covid vaccination rates, is expected to grow by 3.7 percent in the current fiscal year and 4.1 percent in the next year.
According to the report, Nepal’s direct trade with Russia and Ukraine is small, but higher global commodity prices are expected to increase the costs of fuel, agricultural products, metal and mineral imports. These higher prices are expected to widen the current account deficit, reduce the growth rate and increase inflation.
Pradeep Shrestha, proprietor of Harati Furniture at Kumaripati, said that furniture prices had jumped by more than 15 percent.
"The price of a pair of sofas normally starts from Rs20,000 while cupboard prices start from Rs12,000 and dining table prices start from Rs15,000," he said.
“Despite the wedding season having started, demand has not swelled as it used to. The higher prices and people cutting down on their expenses might be the reason for sales remaining at the usual level even during the wedding season,” Shrestha said.
Banks are not buying gold as they are encountering a liquidity crisis.
On March 6, Nepal’s central bank slashed the daily import quota of gold to 10 kg to prevent the depletion of foreign exchange reserves.
"Gold demand has plunged by 50 percent in the middle of the wedding season," bullion traders said.
“Despite the wedding season, demand for gold has fallen by around 50 percent,” said Tej Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers' Associations.
“This shows that people’s purchasing power has dropped. Barely 20 kilos of gold is being traded daily even during the wedding season. We haven’t seen such sluggishness in business before, except during the pandemic and earthquake.”
In Nepal, gold jewellery is a traditionally and culturally essential accoutrement during wedding celebrations when women put on their best ornaments.
A middle-class family typically buys 10 tolas of gold for wedding jewellery, but people are managing with 3-4 tolas nowadays, according to traders.
“Footfall has dropped by 50 percent even with the wedding season in full swing,” said Prabin Bajracharya, proprietor of Hira Bajra Jewellery Traders in Thimi, Bhaktapur.
“If it weren't for the wedding season, there wouldn't be any customers walking into my shop,” Bajracharya said. “It’s not only the economy, consumer confidence, which is one of the determinants of the economy, has also fallen sharply.”
