Inflation still in double digits

Consumer inflation is still in double digits. The latest statistics of the central bank shows that the rate of inflation was 10.4 percent in the first month of the current fiscal year. The only good news for consumers is that inflation has started to slide. Nepal Rastra Bank (NRB) data shows that the price index of the food and beverages group increased by 17.8 percent compared to an increase of 13.4 percent during the same period last year. Except for oil and ghee, the price of all the items in the group has increased.

Of the items showing a double-digit price rise, the price indices of sugar and sugar related products increased by a whopping 49.6 percent in mid-August 2009 compared to an increase of 18.2 percent a year ago, said the release. Similarly, the price of vegetables and fruits has increased by 47.2 percent against a decline of 10.6 percent last year. Likewise, meat, fish and eggs and pulses sub-groups increased in the review period by 32.8 percent and 31.7 percent respectively compared to an increase of 12.1 percent and 19.4 percent in the same period last year.

In the non-food and services groups, tobacco and tobacco related products rose by 17 percent in the review period. Domestic credit increased by 0.1 percent during the period compared to an increase of 1.8 percent last year mainly due to a decrease in the growth of private sector credit, which grew by 0.8 percent. In the foreign trade sector, exports expanded by 12.4 percent compared to a rise of 4.5 percent in the corresponding period of the previous year. Exports to India went up by 6.6 percent in contrast to a decline of 20.4 percent in the same period last year mainly due to a rise in the export of polyester yarn, thread, jute goods, textiles and copper wire rods.

The overall balance of payments (BOP) recorded a deficit of Rs. 1.42 billion in the first month of the current fiscal year. However, the current account posted a surplus of Rs. 777.1 million. "Although there was an increase in the trade deficit, the increase in net transfers was responsible for the current account surplus," states the release of the central bank. Likewise, gross foreign exchange reserves stood at Rs. 270.17 billion in mid-August 2009, a decline of 3.3 percent compared to mid-July 2009. The current level of reserves is sufficient for financing merchandise imports for 10.8 months and service imports for 8.9 months.
Source:Kantipur