Inflation rises to 4.2 percent

December 25, 2018

My Republica, 25 December 2018

KATHMANDU: Inflation, as measured through the consumer price index (CPI), went up to 4.2 percent in the fourth month of the current fiscal year 2018/19 compared to 3.9 percent in the corresponding period of a year earlier.  Releasing the ‘Current Macroeconomic and Financial Situation of Nepal (Based on Four Months’ Data of FY2018/19)’ on Monday, the Nepal Rastra Bank (NRB) said that the uptick in inflation in mid-November is mainly due to the increase in price of transportation, cereal and grains, housing and utilities, and clothing, among others.

However, food and beverage inflation moderated to 1.3 percent in the review period from 2.3 percent a year ago. There was decrease in the price of pulses and legumes, vegetables, and sugar and sugar related products in mid-November, the report shows.
Inflation of pulses and legumes decreased further by 14.3 percent from last year’s fall of 24.1 percent. Inflation of sugar and sugar products also went down 7.6 percent from the price rise of 3.7 percent a year ago. 

Similarly, the price index of vegetables also decreased by 8.7 percent compared to the price rise of 5.6 percent in the corresponding period of the last fiscal year. 

Non-food and service inflation stood at 6.4 percent in mid-November, compared to 5.1 percent a year ago. 

An increase in price of transportation, furnishing and household equipment, housing and utilities sub-groups, among others, accounted for the increase in non-food and service inflation in the review month, according to the report.

Meanwhile, workers’ remittances increased by 36.4 percent to Rs 312.26 billion in the review period compared to a decline of 1.4 percent in the same period of the previous year.

However, the current account registered a deficit of Rs 88.64 billion. The current account had registered a deficit of Rs.48.98 billion in the first four months of FY2017/18. The overall balance of payment (BOP) remained at a deficit of Rs 57.33 billion in the review period compared to a surplus of Rs 2.40 billion in the same period of the previous year.

Likewise, the country has observed a depletion of foreign exchange reserve. The NRB data shows that the gross foreign exchange reserves remained at $9.43 billion as at mid-November 2018, a decrease of 6.5 percent from $10.08 billion as at mid-July 2018. Based on the imports of the first four months of the current fiscal year, the foreign exchange holding is sufficient to cover merchandise imports of 9.2 months, and merchandise and services imports of 7.9 months, according to the NRB report.



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