March 19: The consumer price inflation stood at 6.87 percent in mid-February 2020 compared to 4.35 percent a year ago. Inflation is constantly on the rise despite the government’s assurance to keep it below 6 percent. But inflation has been rising since the last four months.

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 Wednesday (March18).

The report based on data of the first seven months of the current fiscal year states that food and beverage inflation stood at 9.79 percent whereas non-food and service inflation stood at 4.65 percent in the review month.

 “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 7.58 percent inflation followed by 7.29 percent in the tarai, 5.46 percent in the hill and 5.28 percent in the mountainous region. These regions had witnessed 5.19 percent, 3.44 percent, 4.91 percent and 5.27 percent inflation respectively a year ago.

“The consumer price inflation has been rising since the last few months although the winter season should have recorded low inflation,” said economist Keshav Acharya, adding, “This is the time when farmers harvest corps and produce vegetables.”

But Nepal imports most of the food products from India.

In seven months of 2019/20, merchandise exports increased 22.4 percent to Rs 64.97 billion compared to an increase of 12.5 percent a year ago. Destination-wise, exports to India increased 38.0 percent whereas exports to China and other countries decreased 12.7 and 2.4 percent respectively.

Mainly, exports of palm oil, cardamom, jute goods, medicine (ayurvedic), polyster yarn and threads, 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 3.6 percent to Rs 803.60 billion against an increase of 26.0 percent in the same period of the previous year. Destination-wise, imports from China and other countries increased 9.8 percent and 0.8 percent respectively whereas imports from India decreased 8.0 percent.

Imports of crude palm oil, chemical fertilizer, hot rolled sheet in coil, other machinery and parts, crude soyabean oil, 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 5.3 percent to Rs.738.63 billion in the seven months of 2019/20. Such deficit had expanded 27.1 percent in the same period of the previous year. The export-import ratio increased to 8.1 percent in the review period from 6.4 percent in the corresponding period of the previous year.

Remittance inflows decreased 0.5 percent to Rs.513.21 billion in the review period against the increase of 28.5 percent in the same period of the previous year.

According to NRB, Balance of Payments (BOP) remained at a surplus of Rs 21.61 billion in the review period against a deficit of Rs.49.32 billion in the same period of the previous year.