Inflation close to double digits

Nepali inflation is picking up pace and inching close to double-digit figures, threatening to make some serious dent in the household budget of consumers. Fresh data released by the Nepal Rastra Bank (NRB) shows that the inflation based on the consumer price index rose to 9.2 percent in mid-May, the tenth month of the current fiscal year, up from 4.6 percent of the same time last year.

The central bank said the rising prices of food items led to the rise. Still, the inflation based on wholesale price index increased to 10.1 percent.

NRB officials said inflation would further rise in the coming months, as the recent price hike of petroleum products would have to be considered.

On the import front, a rise of 21 percent was seen as people consumed more on the back of healthy inflow of remittance.

NRB said there had been significant rise in import of petroleum products, MS billet, vehicles and spare parts, gold, telecommunication equipment, videos, television and parts.

However, exports fell by 1.2 percent, widening the trade deficit. Of the total exports, the country experienced a decline of 7.5 percent in exports with India due to a fall in the export of vegetable ghee, textiles, chemicals, rosin and toothpaste.

Exports to other countries except India grew by 13 percent compared to a decline of 3.1 percent in the same period last year, on the back of increase in export of pulses, Nepali paper and paper products, herbs, wheat, packing materials of paper, cigarettes, electric wire and stationary, NRB officials said.

There is something to cheer about for the economy. The flow of remittance grew by 35.3 percent to Rs 108.64 billion. During the same period last year, remittance had gone up by just 3.1 percent.

As a result of the huge influx of remittance, Nepal's foreign exchange reserves increased by 19.3 percent to Rs 197.03 billion. The central bank said the current level of reserves is adequate for financing merchandise imports for 10.6 months, and merchandise and service imports for 8.6 months.

On the budgetary front, the government budget deficit was Rs 6.4 billion during that period, compared to a surplus of Rs 2.86 billion. To meet the growing requirement of Indian currency, NRB purchased the Indian units worth Rs 77.27 billion through a sale of US$ 1.21 billion.

The country received foreign cash grants of Rs 13.68 billion to boost development activities. It had got Rs 12.62 billion in the same period last year.
Source: eKantipur