Nepal | April 22, 2019

Consumer price inflation at 4.1pc

Himalayan News Service

Macroeconomic updateKathmandu, July 16

While consumer price inflation held steady at 4.1 per cent in the 11th month of fiscal 2017-18 (mid-May to mid-June) which was similar to the 10th month, it accelerated considerably when compared to the 11th month of the previous fiscal when it had stood at 2.8 per cent.

The ‘Current Macroeconomic and Financial Situation of Nepal’ unveiled by Nepal Rastra Bank (NRB) today has pointed at increase in food inflation as the main cause of consumer price inflation quickening in this fiscal against last fiscal.

The NRB’s report shows that food inflation rose three per cent in mid-May to mid-June this year from a negative growth of one per cent during the same period last fiscal year.

“A surge in prices of vegetables, fruits, ghee and oil, milk products and eggs, among others, were mainly responsible for the rise in food inflation in the review period while rise in food inflation contributed to a rise in overall inflation in the review period,” reads the NRB report.

However, non-food inflation moderated to five per cent in mid-May to mid-June from 5.8 per cent a year ago. A slower growth in cost of education, clothes and footwear, furnishing and household equipment and housing and utilities, among others, accounted for a moderation in non-food inflation in the review month, according to NRB.

Similarly, increment in broad money supply by 13.7 per cent in the review period compared to a rise of 11.6 per cent in corresponding period of previous fiscal year also contributed to rising consumer price inflation.

The NRB report has also hinted at possible rise in inflation in the future owing to Nepali currency notably becoming weaker to the US dollar in recent months, resulting in costlier imports. Nepali currency vis-à-vis the US dollar depreciated by 4.7 per cent in mid-June 2018 from the level of mid-July 2017.

Meanwhile, the current account deficit has widened further to Rs 209.21 billion in the review period from a deficit of Rs 2.99 billion in the same period of the previous year. “The elevated level of imports widened the current account deficit,” NRB stated. As a result, the overall balance of payments (BoP) turned into a deficit of Rs 4.34 billion in contrast to a surplus of Rs 74.23 billion in the same period of last fiscal year.

Likewise, the country’s total trade deficit widened by 24.6 per cent to Rs 1,033 billion in the 11 months of 2017-18 fiscal year. However, the export-import ratio declined to 6.7 per cent in the review period from 7.5 per cent in the corresponding period of the previous year.

The workers’ remittances increased by 7.3 per cent to Rs 679.73 billion in the review period compared to a rise of 5.8 per cent in the same period of the previous fiscal year.


A version of this article appears in print on July 17, 2018 of The Himalayan Times.


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