Inflation at double digit, once again
Kathmandu, June 15
Inflation, which had started moderating following normalisation in supply situation after the end of blockade on Nepal-India border points, stood at 10 per cent in May, as against 9.7 per cent in April.
Consumer prices rose by double-digit again — despite improved supply of fuel and other consumable items following return of normalcy at customs points in the Tarai — due to rise in housing rent, prices of pulses, legumes and vegetables, and education related expenses, says the latest Macroeconomic Report of Nepal Rastra Bank (NRB).
Also, inflationary pressure that is building in India played some role in pushing up prices here because over 60 per cent of Nepal’s imports come from the southern neighbour. Indian inflation stood at 5.8 per cent in May, as against 5.4 per cent in April.
Consumer prices rose in May, as prices of pulses and legumes shot up by 23.4 per cent, while vegetable prices jumped by 20.1 per cent, NRB report shows. Also, prices of clothes and footwear surged by 17 per cent, housing rent rose by 16.4 per cent, prices of alcoholic beverages went up by 15.9 per cent and education expenses increased by 3.4 per cent.
Although prices of goods and services are rising at faster pace, inflation wedge between Nepal and India has been narrowing ever since the blockade on Nepal-India border points was lifted.
Inflation wedge between Nepal and India had widened to 6.4 per cent in January, as consumer prices in Nepal shot up by 12.1 per cent, as against 5.7 per cent in India.
In May, the wedge narrowed down to 4.2 per cent. However, the wedge, in May last year, stood at only 2.1 per cent.
“Inflation wedge is still high because of lingering impact of earthquakes of last April and May, and the obstruction on southern trade routes. However, the inflation differential is narrowing down on account of improved supply situation in Nepal following the restoration of normalcy in the southern trade routes,” NRB report says.
While prices of goods and services still have not shown signs of coming down, salaries of employees are not rising at that level.
Salaries of employees working in different sectors went up by a mere 5.3 per cent in May, shows report.
Among different types of workers, carpenters were the biggest gainers, recording wage hike of a whopping 15.7 per cent in May. Masons also saw 11.8 per cent hike in their wages in May, while wages of agricultural labourers rose by 6.2 per cent in that month.
Employees of banks and financial institutions, on the other hand, saw 2.3 per cent growth in their salaries in May, while civil servants, including army and policy, did not witness any hike in their pay.