Inflation Remains above 6 Percent

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Inflation Remains above 6 Percent

April 21: The year-on-year consumer price inflation stood at 6.7 percent in mid-March 2020 compared to 4.2 percent a year ago, according to the latest report of Nepal Rastra Bank. Inflation is constantly on the rise despite the government’s assurance to keep it below 6 percent.

The report based on data of the first eight months of the current fiscal year states that food and beverage inflation stood at 9.33 percent whereas non-food and service inflation stood at 4.69 percent in the  review month.

Within the food and beverage group, the price of vegetables, spices, pulses and legumes, meat and fish rose significantly in the review month leading to the high inflation rate, according to the central bank’s latest update on the Current Macroeconomic and Financial Situation of Nepal released on Monday (April 20).

 “Within the non-food and service group, the price of education, health, and clothes and footwear subgroups rose moderately in the review month,” the report states.

In the review month, the Kathmandu Valley witnessed 7.61 percent inflation followed by 6.84 percent in the tarai, 5.53 percent in the hill and 5.42 percent in the mountainous region. These regions had witnessed 4.61 percent, 3.61 percent, 4.64 percent and 5.57 percent inflation respectively a year ago, according to the NRB report.

In eight months of 2019/20, merchandise exports increased 22.3 percent to Rs 74.91 billion compared to an increase of 15.6 percent a year ago. Destination-wise, exports to India and other countries increased 35.5 percent and 1.1 percent respectively whereas export to China decreased 19.4 percent.

Mainly, Exports of palm oil, cardamom, medicine (ayurvedic), herbs, jute goods, among others, increased whereas exports of zinc sheet, wire, readymade garment, juice, copper wire rod, among others, decreased in the review period.


Likewise, merchandise imports decreased 2.6 percent to Rs 924.24 billion against an increase of 23.8 percent in the same period of the previous year. Destination-wise, imports from China and other countries increased 5.5 percent and 6.8 percent respectively whereas imports from India decreased 7.5 percent.

Imports of crude palm oil, chemical fertilizer, hot rolled sheet in coil, crude soybean oil, other machinery and parts, crude among others increased whereas imports of MS billet, gold, transport equipment and parts, petroleum products, cement, among others decreased in the review period.

Total trade deficit narrowed down 4.3 percent to Rs 849.33 billion in the eight months of 2019/20. Such deficit had expanded 24.4 percent in the same period of the previous year. The export-import ratio increased to 8.1 percent in the review period from 6.5 percent in the corresponding period of the previous year.

Remittance inflows decreased 1.8 percent to Rs 592.42 billion in the review period against the increase of 23.4 percent in the same period of the previous year.

According to NRB, Balance of Payments (BOP) remained at a surplus of Rs 37.84 billion in the review period against a deficit of Rs 58.99 billion in the same period of the previous year.


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