Price hike still causes concern

KATHMANDU: Price hike doesnot seem to come down. According to the central bank inflation rate of the first month (mid-August) of the fiscal year 2009-10 is still floating above double digit.

However, it has moderated to 10.4 per cent from 13.1 per cent in the same month last year. "Food and beverages, and vegetables and fruits price contributed hugely in the price hike as it increased by 17.8 per cent. But the non-food and services group rose only by 2.1 per cent only," according to the current macroeconomic situation based on the first month's data of 2009-10 published by Nepal Rastra Bank (NRB).

The price rise of food and beverages and non-food and services group, was 13.4 per cent and 12.7 per cent respectively in the same month last fiscal year. the price hike was propelled by sugar and sugar related products as it increased by a whopping 49.6 per cent against 18.2 per cent in the same period last year.

Similarly, the price indices of vegetables and fruits increased by 47.2 per cent -- that is also in sharp contrast to last year's decline of 10.6 per cent.

Region-wise, the price index of Kathmandu valley rose by 10.7 per cent followed by 10.4 per cent in Tarai and by 10.1 per cent in Hills. Last year, the respective rates were 13.5 per cent, 13.1 per cent and 12.4 per cent.

"In the review period, the y-o-y core inflation rose to 11.8 per cent from 10.6 per cent a year ago," said the report.

However, the salaries and wages have also gone up. "The overall year-on-year (y-o-y) salary and wage rate index rose almost to triple by 22.2 per cent compared to a rise of 8.2 per cent a year ago. "Of the salary and wage rate indices, the salary index increased by 32.8 per cent compared to a rise of 0.1 per cent in the same month last fiscal year," the date reveals. Exports seem to be looking up as it expanded by three fold to 12.4 per cent compared to a rise of 4.5 per cent in the same period. Of the total exports, export to India went up by 6.6 per cent against a decline by 20.4 per cent in the same period last year. Exports to other countries increased by 18.5 per cent compared to an increase of 55.3 percent in the same period of last year.

Similarly, total imports rose by 16.3 per cent compared to a higher growth of 33.3 per cent as imports from India rose by 14.9 per cent in the review period compared to a growth of 27.6 per cent and imports from other countries increased by 18.4 per cent in comparison to a significant growth of 42.9 per cent in the same period last fiscal year.

The overall Balance of Payment (BoP) recorded a deficit of Rs 1.42 billion in comparison to a deficit of Rs 3.15 billion in the same period last year. However, the current account posted a surplus of Rs 777.1 million against a deficit of Rs 1.90 billion in the same period last year.

Although there was an increase in trade deficit, the increase in net transfers was responsible for the current account surplusm, reasoned the central bank.

The country received Rs 160.62 million remittance in the first month of this fiscal year.