Nepal's inflation at 7.2pc
eKantipur.com, 7-May-08

On the back of soaring food prices, consumer inflation has shot up to 7.2 percent in the first eight months of the current fiscal year, according to the latest central bank report.
The report on the latest macroeconomic situation released Wednesday says, the upward pressure on inflation came mainly due to substantial increase in the prices of rice, oil and ghee.

According to the report, food and beverages became dearer by 9.4 percent over this period, as the prices of oil and ghee increased by 27.3 percent, grains and cereal products by 14.9 percent and pulses by 13.7 percent. However, consumers found respite in prices of items like sugar and sugar-related products; vegetables and fruits; and spices during this period.

Over this period, the price of tobacco and tobacco related products also increased by 8.3 percent; housing goods and services by 6.1 percent; and medicine and personal care by 5.8 percent.

The price rise was felt most in the hilly regions of the country, followed by the tarai region and Kathmandu Valley, reads the Nepal Rastra Bank (NRB) report.

The report notes the gloom running in the country's industries and trade over the eight months as well.

During the period, the country's total exports went down by 2.6 percent compared to the same period last year. "Of the total exports, exports to India plummeted by 6.9 percent. Exports to other countries, however, grew by 7.2 percent during the period," says the report.

Likewise, total imports increased by 12.5 percent during the period, in contrast to a decline of 1.1 percent recorded in the same period the previous year. Imports from India and other countries went up by 15 percent and 8.2 percent respectively.

According to the report, travel receipts soared by 76.3 percent and workers' remittances also grew by 28.1 percent during the period.

As a result, the current account recorded a surplus of Rs 10.41 billion during the period. The overall balance of payments posted a surplus of Rs. 13.29 billion.

The country's foreign exchange reserves posted double digit growth to Rs 181.98 billion in mid-March 2008, states the report, adding that the reserves are adequate for financing merchandise imports for 11.3 months.

Compared to mid-July 2007, the Nepali currency appreciated by 0.56 percent vis-à-vis the US dollar in mid-March 2008.