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The government has increased public transport fares for the second time in less than a month, citing continued pressure from rising fuel prices - adding to cost-of-living concerns and inflationary pressure across Nepal’s economy.

The Department of Transport Management Nepal announced a 5 percent fare hike for inter-provincial public transport, effective immediately from Wednesday. The revision applies uniformly to passenger vehicles as well as freight carriers operating across both hill and Terai routes.

Second Fare Hike in Three Weeks

This marks the second fare adjustment within a three-week window. Earlier, on Chaitra 25, authorities had raised transport fares by a substantial 15.75 percent to 21.68 percent, reflecting escalating operational costs in the sector.

Officials say the latest revision is directly linked to the increase in fuel prices, particularly diesel, which has now reached Rs 235 per liter - one of the key cost drivers for Nepal’s transport industry.

Fuel Prices Driving Cost Push Inflation

Transport operators have long argued that fare adjustments are necessary to sustain operations amid rising input costs, including fuel, maintenance, and financing expenses. With Nepal heavily dependent on imported petroleum products, fluctuations in global oil prices continue to transmit directly into domestic inflation.

The latest fare hike is expected to have a cascading effect on logistics costs, commodity prices, and overall consumer inflation - especially in a landlocked economy like Nepal where transport costs significantly influence supply chains.

Electric Vehicles Exempt

In a notable policy stance, authorities have clarified that electric vehicles (EVs) will not be allowed to increase fares under the current revision. The move is seen as an effort to promote clean energy transport and reduce dependency on fossil fuels.

Policy analysts suggest this differential pricing approach could incentivize a gradual shift toward electric mobility, although infrastructure gaps and high upfront costs remain barriers.

Frequent fare hikes are likely to face public backlash, particularly from daily wage earners, students, and low-income households who are already grappling with rising living costs.

Economists warn that repeated increases in transport fares - within such a short period - could further dampen consumer spending and strain household budgets, potentially slowing down economic recovery.