Inflation recorded in the first month of the current fiscal year is 4.4 percentage points higher than the central bank´s annual target of 7.5 percent.[break]
The latest macroeconomic report of Nepal Rastra Bank released on Sunday showed that higher inflationary pressure recorded in mid-Aug was the result of double digit growth in prices of most of the consumer goods and services, with vegetable prices leading the way.
Prices of vegetables, which contribute 5.65 percent to the inflation basket, went up by 30.4 percent in the month, the report showed. Prices of ghee and oil also went up by 21 percent in mid-Aug, while sugar and sweets became expensive by 19.9 percent. Among other food items, prices of cereal grains, which contribute 14.81 percent to the inflation basket, nudged up by 5.8 percent.
Such skyrocketing prices of food items tend to put a dent on earnings of low- and middle-income groups, as a huge portion of their spending goes to putting meals on the table. Keeping this in mind, the government recently fixed maximum retail prices of 15 essential commodities. Yet lack of proper mechanism to ensure implementation of the plan -- which many say flouts free market economic policy -- has left prices soaring as ever.
As, rise in prices of food items is exerting pressure on low- and middle-income households, lately, surging prices of non-food items and cost of various essential services have also started burning a hole in the common man´s pocket.
Cost of educational services, for instance, which contributes 8.46 percent to the inflation basket, galloped 12.5 percent in mid-Aug, while transportation cost became expensive by 14.8 percent. Likewise, prices of clothes and footwear rose by 15.1 percent in the month, while housing and utilities costs also surged by 11.8 percent.
Top 5 food items that witnessed biggest hike in mid-Aug
Food Items Food Items Price Hike
Vegetables 30.40%
Ghee and Oil 21%
Sugar & Sweets 19.90%
Tobacco Products 17.90%
Legume Varieties 14.70%
Top 5 non-food items and services that witnessed biggest hike in mid-Aug
Non-food items & services Price Hike
Clothing & Footwear 15.10%
Transport 14.80%
Furnishing & Household Equipment 14.20%
Education 12.50%
Housing & Utilities 11.80%
Source: Nepal Rastra Bank
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