Inflation jumps to 6.33%

Published On: January 20, 2020 10:35 AM NPT By: Republica | @RepublicaNepal

Government has set a target of containing inflation below 6%

KATHMANDU, Jan 20: Consumer inflation stood at 6.55% in mid-December mainly due to soaring prices of food and beverages.

According to the Nepal Rastra Bank (NRB), inflation in the same period of last was recorded at 3.71%.

The Current Macroeconomic Report (for five months of FY2019/20) published by the central bank on Sunday showed that the country in the first five months of the current fiscal year faced average inflation of 6.33%.

In December, price index of food and beverage escalated by 9.76%, up from 7.96% in the previous month. According to the report, prices of vegetables, spices, fruits, pulses and legumes mainly rose significantly during the review period.

During mid-November-mid December, onion soared to the record high price of Rs 230 per kg. According to retailers, black lentil (mas) and yellow lentil (mung) each became dearer by Rs 20 a kg, while the prices of split pigeon pea (rahar) and red lentil (musuro) went up by Rs 10 per kg during the period. Likewise, prices of almost all types of edible oil went up by Rs 10 per liter.

While the price of wheat flour increased by Rs 10 per kg, chili powder also became dearer by Rs 100 per kg.

Showing the cause of rising price of the raw materials in the international market and depreciation of the domestic currency against the US dollar, traders are reported to have increased the prices of edible commodities in the domestic market.

On the other hand, the non-food and service inflation in the month stood at 4.10%. According to the central bank, the prices of education, clothes and footwear, and furnishing and household equipment rose moderately during the period.

The statistics show that Kathmandu Valley witnessed 7.60% inflation, almost double of the rate in the review period last year. Similarly, inflation in tarai surged to 6.66% from 3.65%, and in hilly region rose to 5.27% from 3.84%. The consumer price index in mountain region also went up to 4.83% from 4.05% during the review period.

The year-on-year salary and wage rate index increased by 10.04% in the review month compared to a growth of 9.30% a year ago. In the review month, salary index and wage rate index increased 13.56% and 9.06%, respectively, according to the central bank.

The government through the budget for the current fiscal year has targeted to maintain inflation below an average of 6%. However, soaring prices of essentials along with petroleum products is likely to affect the government's target to control price hike.

The inflation, which remained subdued for a long time, started to rise in the last months of the last fiscal year – FY2018/19.