February 17, 2020 08:28 AM NPT
KATHMANDU, Feb 17: Though the government had set a target to keep the consumer price rise below 6 percent, the average inflation has reached 6.41 percent in the first six months of the current fiscal year 2019/20.
According to the Current Macroeconomic and Financial Situation of Nepal (based on six months’ data) released by the Nepal Rastra Bank (NRB) on Sunday, the pace of the rise of consumer prices has surpassed the government’s target.
NRB officials attribute the recent price hike in India to the spike in Nepal’s inflation.
“It has been a challenge for India to curb its rising inflation. As India is our biggest trading partner and we import most of the goods from there, our inflation also goes up when prices rise in India,” said Gunakar Bhatta, the chief of the Research Department at the NRB.
In its budget speech for the current fiscal year, the government had said that the inflation will be kept below an average of 6 percent. In line with the government’s policy, the NRB had also set a target of taming the inflation within 6 percent.
After remaining steady in the last fiscal year 2018/19, the inflation started to rise from the start of the current fiscal year. Soaring prices of food and vegetables have driven up inflation in the review period, according to NRB officials.
“There is an inflation pressure from the supply side. The imports of some products like vegetables and food have driven up the prices. Our domestic production is also weak as the harvests were hit by floods and low rainfall during the plantation time,” added Bhatta.
NRB officials say that maintaining price stability could be a challenge in the current fiscal year.
Prices of vegetables, spices, pulses and legumes and fruits have rose significantly during the first six months, according to the NRB data. Likewise, within the non-food and service group, the prices of education, clothes and footwear, furnishing and household equipment rose moderately in the same period.