Central Bank Introduces New CPI Basket

Central Bank Introduces New CPI Basket
The Himalayan, 20-Oct-2010

The central bank has introduced a new Consumer Price Index (CPI), increasing the earlier basket of goods and services and market pointers to update the measurement system and make more realistic according to the international standards.

The new basket has been developed on the basis of Classification of Individual Consumption According to Purpose (COICOP). The United Nations has included this system in 1993 under System of National Accounts (SNA).

“The new series of Consumer Price Index (CPI) has been started from this fiscal year’s first month,” said the central bank here today.

The central bank has upgraded the CPI series to the new one according to its findings of Family Survey five years ago.

“Nepal Rastra Bank (NRB) has also shifted the base year from 1995-96 to 2005-06,” it said, adding that under the new series, the weight assigned to the food and beverage and services groups have also been changed.

According to the new CPI series, the weight assigned to the food and beverage group is 46.82 per cent in the new series compared to 53.20 per cent in the 1995-96 survey.

Likewise, the weight assigned to the non-food and services group has been changed to 53.18 per cent from 46.80 per cent.

Similarly, the central bank has increased the urban and rural market centres — from where they collect datas — by 12 to 33 from the old 21 urban market centres in the old series. “The old basket of 301 goods and services has also been increased in the new series to 410 goods and services,” it added.

Under the 401 goods and services, 223 are domestic, 133 imported and 54 goods and services are both domestic and imported.

“The change in the CPI will help make the price hike measurement more simple, authentic and scientic,” according to the central bank.

Had the central bank used the old series, inflation rate in the first month of the current fiscal year would have been at 10.4 per cent. “But inflation stands at 9.5 per cent due to new measurement system,” the central bank said, adding that despite a 12.5 per cent rise in the index of the food and beverage group, inflation moderated to a single digit at 9.5 per cent due to low increment in the index of the non-food and services group.

Meanwhile, the International Monetary Fund (IMF) has forecast that the Consumer Price inflation will come down to 6.8 per cent in 2011. “For the year 2010, CPI will stand at 10.5 per cent,” the IMF has predicted.

Prices of essential commodities up

Prices of essential commodities up
Republica, 6-Feb-10

The prices of major essential commodities have skyrocketed in the market in a month´s period. Consumers have faced a sharp rise in prices of staple food items such as pulses, sugar and edible oil over the period.

According to retailers, the price of sunflower oil soared to Rs 100 from Rs 90 per liter recorded a month ago. Likewise, mustard oil became dearer by Rs 15 over the period. Mustard oil is selling for Rs 105 per liter in the market.

Nirajan Neupane, owner of Kusheshwar Cold Store in Ghattekulo, said the prices of essential commodities have skyrocketed in the market as wholesalers are raising the prices every other day.

“The price of sugar has increased to Rs 90 from Rs 80 per kg. Likewise, iodized salt has become dearer by Rs 4 to Rs 15 per kg over the period,” Neupane added.

Prices of popular rice varieties such as Sona Mansuli, Jira Masino and Mansuli steam have also increased over the period by Rs 5 to Rs 15 per kg.

“Price of Mansuli rice has increased to Rs 45 per kg from Rs 30 recorded a month ago. Similarly, price of Jira Masino rice increased to Rs 56 from Rs 48 and Mansuli steam increased from Rs 35 to Rs 40 kg,” Neupane added.

The price of lentils, another popular food commodity, also saw a sharp rise over the period. Price of Rahar Dal increased to Rs 140 from Rs 130 while Musuro Dal became dearer by Rs 5 to Rs 105 per kg.

According to Nepal Retailers´ Association, price of Mung Dal too increased by Rs 10 to Rs 140 per kg over the period.

Ganga KC of New Khadya Store in Baneshwar said consumers were facing sharp rise in prices of essential commodities due to haphazard price rise by the wholesalers.

“Price of Mas Dal increased by Rs 25 to Rs 130 per kg over the period. There have been minor fluctuations in prices of all major commodities over the period,” he added.

Inflation: November 2009 (9.9%)

Inflation moderates, food costlier
REPUBLICA, 18-Dec-09

Country´s overall inflation moderated to 9.9 percent in mid-November 2009, compared to 14.5 percent during the same period last year, Sustained rise in food prices, however, continued to bore deep hole in consumers´ pockets.

Says a latest report of Nepal Rastra Bank (NRB), drop in consumer prices of non-food items and services caused overall inflation to moderate. “Otherwise, prices of food items have continue to grow by more than 16 percent,” it states.

On food items also, consumers mainly bore the brunt of sharp rise in prices of sugar and sugar-related products and fruits and vegetables.

Prices of sugar and sugar-related products had soared to about 51 percent during the period, while fruits and vegetables too had become expensive by about 39 percent.

The report further notes that lentils became expensive by 29 percent and meat, fish and egg prices too jumped 21.4 percent during the period.

Only food items whose prices soared at moderate rate are cereal products. Their prices during the period grew at the rate of 8.1 percent, whereas their prices had jumped 19.1 percent during the same period last year.

Consumers also witnessed low growth in transport fares and communication tariff during the period, compared to their price rise in the same period last year. Together, transportation and communications price index grew by 8 percent in mid-September, 2009, whereas their prices had grown by 22 percent in the same period last year.

Prices of tobacco and tobacco-related products too became expensive by 11.6 percent during the period.

Likewise, the overall year-to-year salary and wage rate index rose by 22.2 percent in mid-September 2009, as compared to a rise of 10 percent a year ago.

Of the salary and wage rate indices, the salary index increased by 32.8 percent. The increase in basic salary and allowances for civil servants and its simultaneous effect on salaries in the private sector contributed to such an increase in the salary index.

The overall wage index too went up by 18.9 percent during the period, compared to 13.3 percent during the same period last year.

Inflation woes

ekantipur, 12-Mar-09
BISHWAMBHER PYAKURYAL

A country where almost 48 percent of the children below age five are underweight and 75 percent of the pregnant women are anaemic largely because of inadequate dietary intake, escalating food prices are a serious policy challenge. Households that are net buyers of food are hit hard by an increase in food prices. The Household Budget Survey 2008 conducted by Nepal Rastra Bank shows the average monthly expenditure of rural households to be Rs. 11,942, out of which food accounts for 44.09 percent. Since there is a strong link between the expenses of the poor and food price fluctuations, this expenditure pattern shows that Nepal's low-income groups are facing a severe economic hardship because of food price inflation.

In the past, when the inflation rate in India was high, panchayat bureaucrats used to blame India for exporting its inflation to Nepal. The domestic policy was not very often questioned. It is, therefore, a matter of surprise why the government now keeps quiet instead of informing the people that despite India's inflation being at a historic low and food prices showing a declining trend, the country has failed to import India's lower inflation rate.

The inflation rate in India has come down to a 15-month low of 3.36 percent for the week ended mid-February, 2009. This has happened because of cheaper food items and manufacturing products due to an economic slowdown in the Indian economy. Therefore, as there was a fall in the overall wholesale price index-based inflation, there has been an overall fall in the inflation rate.

Nepal's year-on-year consumer inflation remains at 14.4 per cent. The 14 plus percent rate of inflation has remained stable since the last quarter of the fiscal year 2007/08. This price rise has been driven by a significant rise in food and beverages prices (18.3 percent) and high prices in the non-food and services group. Bandhs, infrastructural difficulties and high transportation costs are, of course, responsible. But how is it possible that Nepal's high price economy is inelastic to India's low level inflationary regime under open border informal economic practices?

There is plenty of literature available on the Indo-Nepal informal trade. A study conducted by Nepali and Indian scholars shows that informal trade from India to Nepal stands at US$ 196 million and from Nepal to India at US$ 193 million. Interestingly, this situation shows that tariffs and quantitative restrictions between the two countries are not barriers. If this was the case, it would have been inevitable for Nepal's imported goods to be made accessible at much lower prices.

The Nepalese people have been denied moderate food prices for both domestic products and Indian imports. Compensating the loss from the trade in goods has also not been possible for the last few years. Statistics released by the Central Bureau of Statistics shows the manufacturing production index declining by 1.4 percent in 2007/08 compared to a growth of 2.6 percent in the previous year. Recent evidence shows that despite some successes in creating supporting infrastructure, trade in manufactured goods is going through difficult times in most South Asian nations. In 2007/08, the merchandise trade deficit widened by 22.2 percent to Rs. 165.3 billion compared to an increase of 19.2 percent in the previous year. Nepal's alarming trade deficit with India is largely because of a decline in the export of vegetable ghee, textiles, chemicals, rosin and readymade garments.

Nepal's policy has failed to link export trade with other sectors such as agriculture, forestry and tourism. There are incomplete legal and institutional reforms. No alternative schemes have yet been brought out to address the declining trade and competitiveness of readymade garments after the expiry of the Multi-Fibre Agreement. Nepal still faces inadequate and poor infrastructure and underutilization of the existing dry ports.

The success of a trade policy is reflected in its impact on government revenues, the well-being of the people and strength in creating an investment environment. As trade has not been directed towards this end, the Three-Year Interim Plan's objective to reduce the trade deficit by 15 percent of GDP seems difficult to achieve.

South Asia's future in trade in services has recently been presented in a regional work entitled Trade in Services in South Asia: Opportunities and Risks of Liberalization. Edited by Saman Kelegama of the Institute of Policy Studies, Colombo, the publication offers an overview of the state of the service trade in the region. Economic growth advances when the service sector grows. In the 10 years from 1993-2003, South Asia's exports of commercial services increased fourfold, i.e., from US$ 7.9 billion to US$ 29 billion. Currently, the service sector provides more than 60 percent of the GDP in many countries. Its contribution to the GDP in South Asia ranges from 32.48 percent in Nepal to 58.1 percent in India.

India's share in world service exports has increased from 0.5 percent in 1995 to 2.3 percent in 2005. In Pakistan, service trade has been growing faster than merchandise trade. In Sri Lanka, key sectors of the service economy are linked to foreign competition by carefully assessing the impacts of liberalization on the economy. Bangladesh has seen a growth in the service sector for the last three decades. This sector has grown faster than the overall GDP in the past decade.

After its accession to the WTO, Nepal has liberalized the service sector rather aggressively with the participation of the private sector including the foreign sector. Given a strong institutional foundation to discourage anti-competitive practices, Nepal has potential in tourism, higher education and health services. The Maldives has visible advantages from the service sector largely from tourism. Bhutan has begun to explore the possibility of benefiting from the service sector. Tourism and electricity are their major service exports.

As trading in manufacturing goods is not performing well, and trading services especially in tourism, health, education and labour can be attractive for consumers beyond SAARC, there is a strong need to develop advanced service infrastructure to boost the region's share in the global service trade.

To ensure benefits from service trade, Nepal should learn to grasp offensive and defensive interests through multi-sectoral dialogue and debate with different stakeholders. As regulation in health, education, finance and environment is crucial, it is important to correctly understand the difference between over-regulation and effective regulation.

A large part of the service trade data is intangible. Serious home work needs to be done to analyse it to develop common interests in the region. A notable challenge South Asia faces is striking a balance between the medium-term hazards of increased unemployment and the longer-term benefits of increased competitiveness. Achieving this goal would mean formulating a viable policy on trade in services for sustainable development.

The author is a professor of economics at Tribhuvan University.

Inflation at 14.4 percent, up from last month: NRB

ekantipur, 6-Feb-09

While the world is witnessing decline in inflation rates, prices continue to rise in Nepal. Although Nepal Oil Corporation (NOC), the sole importer of petroleum products in the country, is cutting down the petroleum prices and the prices of construction materials has gone down, the inflation is rising in the country.

Nepal Rastra Bank (NRB) said in its latest report on inflation on Friday that the country witnessed inflation of 14.4 percent in the period mid-December to mid-January up from 14.1 percent in mid-November to mid-December.

The consumer price index had actually gone down during mid-November to mid-December from 14.5 percent in the earlier month. It was expected that the trend would continue but it has been found otherwise now.

The inflation was at just 5.8 percent during mid-December to mid-January last year. The NRB report has however presented a unique picture of inflation that the wholesale price index was higher than consumer price index in mid-December to mid-January.

The wholesale price index rose by 14.7 percent against 14.4 percent of consumer price index. Generally, wholesale price index remains low compared to consumer price index as many costs are added in consumer prices.

The NRB has said that the inflation witnessed a rise this year as the price food and beverage category saw increase in their prices by 18.3 percent and non-food and service category witnessed 10.3 percent rise in prices against 7.3 percent and 4.2 percent respectively last year.

Amongst the products in the food and beverage group, sugar products witnessed the highest price rise by 37.3 percent. The prices of sugar products had declined by 14.2 percent last year.

Likewise, cooking oil, fish, meat, eggs and restaurant foods also saw higher price rises this year against last year. Non-food items also saw huge price rises by 20.7 percent in the sixth month of the current fiscal year. This group had witnessed price rise by just 7.5 percent last year.

According to the NRB report, Kathmandu valley saw the highest price rise at 15.8 percent during mid-December to mid-January period. The hilly region saw increase in inflation by 14.2 percent whereas Terai saw it gone up by 13.6 percent.

In a recent survey of the World Food Programme conducted in coordination with government and private sectors also reveled the interesting fact that inflation higher in Kathmandu than that witnessed in Rolpa and Salyan which have a difficult terrain.

Inflation reached 14.1pc in Mangsir

Inflation reached 14.1pc in Mangsir
ekantipur, 7-Jan-09

The inflation for the month of Mangsir (mid-November to mid-December 2008) was 14.1 percent a sharp increase compared to last Mangsir when it was 5.7 percent, Nepal Rastra Bank said in a statement
on Wednesday.

The inflation among food and beverages was 17.2 percent during this period as against 7.1 percent in the corresponding month last year. The highest inflation among foodstuff was in sugar and sugar-based foods which was 35.9 percent. This figure stood at 17 percent last year. Similarly inflation of ghee and edible oils was 26.2 percent as against 12.5 percent last year. Likewise inflation of rice and rice rice-based foodstuff was 21.8 percent compared to 12.5 percent last year.

Inflation of non-food items and services (including transport, communication, household goods, tobacco) stood at 10.8 percent compared to 4.1 percent in the same month last year. Region-wise inflation was highest in Kathmandu where it stood at 16.2 percetn, and in 13.6 percent and 13.1 percent in the hiss and the Terai respectively. These figures stood at 4.9, 5.3 and 6.2 percent during the same period last year.

Inflation hits 14pc, wages up 9 percent

Inflation hits 14pc, wages up 9 percent
ekantipur, 17-Nov-08

Driven by a significant rise in food and beverage prices besides non-food and services, inflation based on consumer price index swelled to 14.1 percent in mid-October 2008 against 6.3 percent during the corresponding period in the previous year.

Inflation was higher in mid-October than in mid-September when prices had gone up by 13.5 percent.

Nepal Rastra Bank (NRB) said in a statement on Monday that inflation had more than doubled in the review period this year as the food and beverage group witnessed a 15.2 percent rise in prices and the non-food and service group went up by 12.9 percent.

Their prices had gone up by 9.5 percent and 2.9 percent respectively during the period last year.

Sugar products became dearer by 39.5 percent while the price of oil and ghee-based products shot up by 35.4 percent. Sugar had gone down by 18.4 percent in the review period last year. Oil and ghee had witnessed a price rise of 12.8 percent.

The price index of transport and communication and building materials soared by 23.1 and 18.3 percent respectively this year against minus 0.5 and 2.5 percent last year.

Core inflation rose to 13.1 percent from 4.7 percent during the review period a year ago, NRB said.

However, the overall wholesale price inflation moderated to 9.3 percent in mid-October this year against 10.3 percent a year ago. The moderation was caused mainly by a decline in the prices of cash crops, fruits and vegetables despite a sharp price rise in imported commodities. This year, the price of agricultural commodities fell by 0.5 percent compared to 14.1 percent last year.

Among imported goods, petroleum products and coal went up 39.4 percent while vehicle and machinery prices increased by 30.4 percent.

With regard to domestic manufactured goods, food-related products and construction materials soared by 21.5 and 18.9 percent respectively. Their prices had risen by 5.9 and 15.5 percent last year.

The overall index of salaries and wages rose by 9.1 percent in the review period this year against 11.9 percent last year.

Inflation hits 13.5 percent

Inflation hits 13.5 percent
ekantipur, 3-Nov-08

Driven by a significant rise in the prices of foods and beverages as well as non-food items and services, inflation based on consumer price index rose to 13.5 percent in mid-September 2008 from 7 percent recorded last year.

Nepal Rastra Bank (NRB), the central bank, said in a statement that food and beverage prices swelled to a whopping 14.2 percent from 10.9 percent in the review period.

The price rise in the non-food and service group was recorded at 12.8 percent compared to 2.8 percent a year earlier. Core inflation rose to 12.1 percent from 5.4 percent previously. However, NRB said inflation according to the wholesale price index softened to 10.3 percent in mid-September compared to 11.1 percent a year earlier.

“The moderation was due mainly to a decline in the prices of cash crops, fruits and vegetables under the agricultural commodities group in spite of an increase in the rates of imported commodities,” the bank added in the statement.

Prices of agricultural commodities and manufactured goods increased by 0.7 percent and 15.8 percent respectively compared to 16.6 percent and 7.8 percent.

The bank also said the overall salary and wage rate index soared by 9.2 percent in mid-September compared to a rise of 12.5 percent a year ago. Regarding salary and wage rate indices, the salary index remained unchanged in the review period compared to a rise of 10.9 percent in the corresponding period last year. The wage rate index went up by 12.3 percent compared to 13.1 percent recorded last year.

Wages of agricultural, industrial and construction labourers shot up by 19.5 percent, 2.7 percent and 8.9 percent respectively in the review period. The increment in wage rates last year was recorded at 9.1 percent, 19.4 percent and 13.2 percent respectively.

New monetary policy to focus on inflation

New monetary policy to focus on inflation
ekantipur, 9-Jul-08

With a major focus on curtailing the swelling inflation that is already close to 10 percent, Nepal Rastra Bank is all set to bring out its Monetary Policy for the next fiscal year, even though the government is deferring on the announcement of a new fiscal budget.

A high ranking government official told the Post that the central bank is making all the necessary preparations to announce its annual monetary policy in the third week of July. "As per the NRB Act, we will make the monetary policy public on the usual time despite the fact that the government is delaying the announcement of a new budget," said the official.

He further said that as the central bank can amend its monetary policy anytime, it will do so if the policies or provisions of the upcoming budget contradict with NRB's monetary policy.

He said that the major focus of the new monetary policy would be to deal with the rising price level, though the central bank has limited policy options. Since rising inflation is a global phenomenon, domestic policy can hardly make any remarkable impact to keep the inflation level within a desired level.

However, he dropped hints that there will be no change in the existing bank rate and Cash Reserve Ratio (CRR) to squeeze liquidity to control inflation, as there is neither a liquidity crunch nor excess liquidity to fuel the inflation. "Curtailing money supply in the name of limiting inflation will hurt growth prospects and that is something we don't want," he said.

He further said that the upcoming monetary policy would take measures to increase interest rates on deposits to provide some relief to the depositors, who are facing a negative interest rate.

"Higher interest rates on deposits will also help curtail consumption," he said and added that there will not be any remarkable impact on investment even if the lending rates go up by one to two percentage points.

The official said that the monetary policy is less likely to announce any major policy changes for promoting exports and added that there are hardly any measures that can be announced to promote the sector. The monetary policy, among others, will also announce the full-fledge implementation of the Basel II, an advance account keeping tool for financial institutions aimed at raising the quality of financial transactions up to international levels and promote more transparency.

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.

Rising food prices

Rising food prices
eKantipur, 6-May-08
Editorial

The specter of rising food prices is hurting Nepali consumers. That escalating agro-commodity prices are pushing up inflation is reason enough for the government to worry. In an attempt to temper the high prices, the government has come up with two measures — banning wheat exports and selling rice from the inventory of the Nepal Food Corporation. However, the food price rise is not an aberration only for Nepal; it is now a global phenomenon caused by rising consumption in emerging economies, escalating fuel prices and massive use of grain for producing bio-fuel. It is projected that agro-prices will stay on an upward trajectory, at least for the next several months. But our production has not kept pace with the increase in demand. Against this background, the government's steps are virtually meaningless. More needs to be done.

The government should crack down on the practice of hoarding, which normally happens in Nepal at times of deficit. On top of that, a string of policy measures is necessary to address supply-side shortages. It might make sense for the government to ban the export of wheat to keep domestic prices under control in the short run. However, bans and other restrictions have to be imposed without hurting the interests of producers at home. Anyway, all these are short-term solutions. Food security calls for long-term planning in order to correct the widening mismatch between demand and supply. Food grains do not fetch attractive prices, and farmers are migrating to cash crops. There is a need to incentivize farmers to produce cereal crops, as income from farming is inadequate to cover increasing input costs.

One way to make food grain cultivation profitable is to increase productivity. Output enhancement depends on how efficiently and quickly we can upgrade cultivation technology, boost private sector investment on a massive scale and develop basic infrastructure like irrigation, agricultural roads and electrification. A number of reports have blamed low-quality fertilizers and insecticides for the almost stagnant productivity of major food crops. A steep rise in yield is possible if we judiciously use available technologies, and for that we need to educate our farmers. We should also seriously think of reintroducing subsidies to install basic infrastructure like shallow tube wells to raise the yield per hectare of cereal crops like rice and wheat, which is far below the regional average. As such, the focus ought to be on increasing productivity and plugging leakages in procurement and distribution if food prices are to be kept under check. All such policies have to benefit both producers and consumers. We cannot betray the interests of the urban poor, the rural landless and small and marginal farmers. We must ensure that they do not lose because of shortages and soaring prices. This is possible only by raising income levels by commercializing farming and fostering economic growth.

Be prepared for higher prices: rice traders

Be prepared for higher prices: rice traders
eKantipur, 28-Apr-08

Nepali consumers staggering under mounting food prices should brace themselves for another rise in the price of rice, said traders.

They said that as Indian security forces had been intensifying border patrols, informal rice imports had slowed to a trickle. Nepali merchants have been bringing in grain through informal channels in the porous border after India stopped its export.

The traders also chided the government for not lobbying the Indian government to resume rice shipments to Nepal. India slapped a ban on rice exports in a bid to arrest rising inflation.

The local price of rice has gone up 25 percent compared to a year earlier, said traders.

Ganesh Lath, president of the Birgunj Chamber of Commerce, predicted that prices would keep shooting up until mid-September.

He said consumers wouldn't have been put in such a difficulty if the government had tried to persuade the Indian government through diplomatic channels to resume rice exports to Nepal.

The Birgunj Office of Nepal Rastra Bank said that prices would stay on an upward trajectory until the embargo was revoked. According to its findings, local rice production fulfills only 65 percent of demand.

An official at Birgunj Customs said no rice has come in from India from last October. Before the ban, 26,448 tons of paddy and 3,276 tons of rice were imported in the first quarter of the current fiscal year.

Onion prices rise as India bars export

Onion prices rise as India bars export
eKantipur.com, 11-Oct-07

A restriction on the export of onions by India has led to a dramatic rise in the price of the vegetable, even as prices of most other vegetables are a]lready high because of continuing shortages in the Kathmandu valley.
The price of onions touched Rs 50 per kg on Thursday at the Kalimati wholesale market. They were selling for about Rs 35 per kg two weeks ago when the supply situation was relatively better. "Onions are in such short supply in India that the Indian government has slapped restrictions on their export to prevent a crisis in the market," Bharat Upreti, a wholesaler and importer of onions at the Kalimati vegetable market, told the Post.

Citing a paucity of onions in India, major suppliers have stopped shipping the popular vegetable to Nepal.

Following the ban, the supply of onions from India has come almost to a halt. "Whatever that is coming is coming unofficially and through clandestine routes taking advantage of the porous border," said Upreti.

According to traders, the volume of onion supplies from India at the Kalimati vegetable market has dwindled to a meager six tons daily from over 60 tons previously. Nepal imports most of its onions from Nashik in the Indian state of Maharashtra.

Responding to the short supply and rising price of onions, imports from China are finding their way into the Nepali market.

Although the quantities coming in are small, Chinese onions have helped check the price rise. "If it had not been for Chinese onions, the price would have crossed over Rs 80 per kg," said Binaya Shrestha, planning officer of the Kalimati Fruits and Vegetables Market Development Board (KFVMDB). Shrestha expects onion prices to remain on the higher side until the next harvest season in November.

Likewise, the price of potatoes has inched upwards marginally over the past two weeks. The prices of red and white potatoes were about Rs 25 and Rs 22 per kg respectively on Thursday. However, to the relief of consumers, tomato prices tumbled over the past two weeks.

According to the KFVMDB, the going rates for big and small tomatoes were Rs 23 and Rs 19 per kg respectively on Thursday, a steep drop from Rs 35 and Rs 39 two weeks ago.

Consumer inflation eases

Consumer inflation eases
eKantipur.com, 3-Jul-07

As an impact of lower rate of price rise in food materials and appreciation of the Nepali currency, consumer prices grew at 4.6 percent in mid-May.

However, average inflation for the first 10 months of the fiscal year remained at 6.8 percent, says a latest report of Nepal Rastra Bank (NRB).

According to the report on the country's macroeconomic situation for the first ten months, prices of food and beverages rose by 6.1 percent during the period, contrary to a rise of 9.1 percent a year ago.

During the period, the price of spices grew by 20 percent. However, the prices of sugar and related products declined by 16.3 percent, pulses went down by 11.2 percent, grains and cereal products declined by 6.4 percent, vegetables and fruits dropped by 6.4 percent and beverages lowered by 2.3 percent, easing inflation.

Likewise, prices of non-food items and services rose by 3 percent compared to a rise of 9.1 percent of the same period last year. The moderate rise in prices of this group is due to the impact of recent appreciation of the Nepalese currency against the US dollar on imported commodities. According to NRB, Nepali currency vis-à-vis US dollar appreciated by 12.79 percent in mid-May in comparison to mid-July 2006.

The exchange rate of one US dollar stood at Rs 65.70 in mid-May 2007 compared to Rs 72.19 in mid-May 2006. As a result, remittance receipt of the country grew at a slower rate.

NRB report further says that Nepal's external sector did not perform satisfactorily in the first ten months of 2006/07. “Exports fell by 0.3 percent in contrast to a growth of 3.3 percent recorded in the same period last year.”

The central bank has attributed the decline to a number of factors such as deteriorating security condition, frequent bandas, lack of investment friendly climate and power shortages.

While exports to India rose by just 1 percent in the first 10 months, exports to other countries declined by 3.1 percent. In the same period last year, exports to India had grown by 8 percent, and exports to other countries had declined by 5.6 percent.

Likewise, the country's total imports rose by 10.5 percent during the period, whereas it had grown by 16 percent in the same period last year.

Imports from India also increased at a slower rate of 11.4 percent and imports from other countries also rose by 9 percent during the period.