Inflation at 11.2 per cent by mid-September

HIMALAYAN NEWS SERVICE

KATHMANDU: Ever increasing fuel price and ineffective market monitoring has finally been reflected in the national inflation statistics, as inflation remained above 11 per cent by mid-September.

The year-on-year inflation, as measured by the consumer price index, increased by 11.2 per cent in mid-September 2012, as compared to an 8.5 per cent increment in the corresponding period of the previous year, according to the macroeconomic report for the second month of the current fiscal year published by Nepal Rastra Bank (NRB).

In the previous month, year-on-year inflation stood at 11.9 per cent. Even though the burden of the continuous price rise had already been affecting consumers’ purchasing power for the last few years, official inflation data seemed to be unable to reveal the actual level of price rise in the market. However, of late, official inflation data is also registering double digit increment.

“The increased fuel price has led to an increase in the price of most commodities due to higher transportation cost,” said vice president of Consumer Rights Protection Forum Nepal Ramesh Chandra Poudel. In the last one year, fuel prices have increased by nine times, thus increasing transportation costs.

The price of petrol has gone up to Rs 125 from Rs 102 per litre, and a litre of diesel has reached Rs 97, that used to be Rs 75 a year ago. The government increased the official cargo transport fare by 4.5 per cent four months back.

According to the NRB data, within the group of non-food and services, the price index of transport has increased by 15.7 per cent during the review period, as compared to an increase of 12.7 per cent in the corresponding period of the previous year.

Likewise, ineffective market monitoring that has been unable to remove distortions such as black marketing and cartel, has further fuelled price rise, added Poudel. The monetary measures to contain inflation have also been unsuccessful as static money supply has also not been able to keep price hike in check.

The existence of a large scale informal economy that is out of control of NRB’s monetary measures make tackling exponential price rise difficult, economists blame. The large amount of remittance inflow has put money in the hands of people boosting their spending capacity and further pushing up the price rise.

The year-on-year wholesale price index also increased by 10.2 per cent during the review period, as compared to a rise of 7.1 per cent in the corresponding period of the previous year.

CRR criterion for Dashain

KATHMANDU: Nepal Rastra Bank (NRB) has directed licensed commercial banks and financial institutions, falling in the ‘A’, ‘B’ and ‘C’ categories, to consider October 21 to November 2 as a single week while computing the Cash Reserve Ratio (CRR) due to Dashain holidays. All licensed finance institutions have to submit their CRR report to NRB on a monthly basis.