At a time when prices of essential commodities have been increasing due to weakening Nepali rupee against US dollar, Nepal Rastra Bank (NRB) has said inflation in the first month of 2012/13 (the month ending mid-August) was recorded at 7.9 percent compared to 11.9 percent recorded in the same month of last year.
The Macro Economic Situation of Nepal, a monthly economic update released by NRB, shows prices of commodities under food and beverage group, and non-food and services group rose by 8.9 percent and 7 percent, respectively, during the review period. Prices of food and beverages, and non-food and services had increased by 12.2 percent and 11.6 percent in the same period last year.
Average inflation was recorded at 9.9 percent in the last fiscal year, despite the government´s target to limit it within 7 percent. In the budget for fiscal year 2013/14, the government has set the target of containing inflation at 8 percent. Economists, however, have termed the target an ambitious one given the rising prices of fuel and other commodities owing to strong greenback.
Among the commodities falling under the food and beverage group, price index of meat and fish sub-group saw the highest increment of 17.4 percent during the review month. The inflation in the sub-group was recorded at 11.5 percent last year.
Price of commodities under restaurant and hotel sub-groups increased by 12.2 percent during the review month, down from 12.6 percent recorded in the same month last year. However, price index of food grains went up significantly to 11. 5 percent compared to 5.8 percent recorded last year.
Prices of tobacco products and hard drinks increased by 9.9 percent and 9.6 percent, respectively, compared to 17.9 percent and 12.1 percent in the same month last year.
In the non-food and services group, the price index of furnishing and household equipment increased by 10.8 percent during the review period compared to a rise of 14.2 percent in the same period of last year.
In foreign trade front, country´s trade deficit continued to increased, albeit at a lower rate, compared to trade figures of the same month last year. According to the central bank´s report, total trade deficit increased by 4.5 percent to Rs 41.56 billion during the review month. Trade deficit with India increased by 9.9 percent during the review period compared to an increase by 58.9 percent in the same period of the previous year.
However, trade deficit with other countries decreased by 4.4 percent in contrast to an increase of 36.3 percent during the same period of last year. The ratio of export to import was recorded at 15.4 percent during the review month compared to 15.3 percent during the same period of the last year.
During the review month, total merchandise exports went up by 5.4 percent to Rs 7.59 billion. Such exports had increased by 18.5 percent to Rs 7.2 billion during the same period last year.
Similarly, export to India - Nepal´s largest trade partner -- went up by 15.1 percent during the review month, up from 5.7 percent reported in the same period of last year.
“The rise in export to India during the review period is due to increase in export of zinc sheet, juice, Ayurvedic medicine and polyester yarn, among others,” says the report.
However, country´s export to third countries declined by 7.7 percent during the period due to drop in export of pulses, paper and paper products. Nepal´s third country exports had increased by 42.1 percent in the same month last year.
Similarly, total merchandise imports soared by 4.6 percent to Rs 49.15 billion in the review month. In the same month of last year, total merchandise imports had increased by 43.7 percent to Rs. 46.98 billion.
Imports from India increased at a slower rate of 10.7 percent during the review month compared to 48.1 percent recorded in the same month of last year. However, import from other countries went down by 4.9 percent in the first month of 2013/14, compared to growth of 37.2 percent recorded in the same period last year.
According to the report, imports from India increased largely due rise in the import of petroleum products, other machinery & parts, dry cell battery and medicine, among others.
Similarly, NRB attributed decline in imports from overseas countries to drop in the import of pipe and fittings, electrical goods, gold and edible oil, among others.
Nepal´s Balance of Payments (BoP) recorded surplus of Rs 16.09 billion during the month ending mid-August, the latest macro economic report of Nepal Rastra Bank shows.
The surplus was Rs 5.56 billion during the review period of 2012/13.In the review month, the current account registered surplus of Rs 10.07 billion compared to a surplus of Rs 56.7 million in the same period of the previous year. The report says high surplus in the current account is primarily due to low growth of merchandise imports and decline in the service imports during the review period.
Similarly, the gross foreign exchange reserves increased by 4.2 percent to Rs 555.87 billion during the review month, up from Rs 533.3 billion recorded a month earlier.
Source:- myrepublica.com
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