A press statement issued by Nepal Rastra Bank said that food and beverage prices shot up by 13.4 percent while non-food and service rates were up 12.7 percent.
Propelled by a remarkable rise in the prices of food and non-food commodities, the rate of inflation during the first month of the current fiscal year climbed to an alarming 13.1 percent from 6.3 percent recorded during the same period last year. A press statement issued by Nepal Rastra Bank said that food and beverage prices shot up by 13.4 percent while non-food and service rates were up 12.7 percent. Of the items showing a double-digit price rise, the price indices of oil and ghee increased by a whopping 36 percent in mid-August 2008 compared to an increase of 11.4 percent a year ago, said the release. Likewise, the sub-group of grains and cereal products witnessed a rise of 23.5 percent in mid-August 2008 while the prices of rice and rice products increased by 27.8 percent compared to an increase of 7 percent a year ago.
Similarly, in the non-food and service categories, the index of transportation and communication, housing goods and services, and tobacco and related products rose by 23.1 percent, 18.1 percent and 12.7 percent respectively compared to last year.
In the foreign trade sector, exports rose by 2.1 percent compared to the significant rise of 13.3 percent in the corresponding period of the previous year. However, exports to India plummeted by 20.7 percent during the period as compared to the same period last year mainly due to a decline in the export of vegetable ghee, thread and jute goods. Similarly, exports to other countries surged owing to the export of pulses, woollen carpets, pashmina, tanned skin and herbs, said the release.
The overall balance of payments (BOP) recorded a deficit of Rs. 2.97 billion during the period. Of the shortfall, the current account deficit amounted to Rs. 781 million. Although net transfers rose by 64.7 percent, an increase in the trade deficit as well as a decline in net services was responsible for the current account deficit, added the release.
“Under transfers, workers’ remittances increased by 43.2 percent compared to the 21.4 percent growth in the corresponding period of the previous year,” said the release.
Likewise, gross foreign exchange reserves stood at Rs. 205.6 billion in mid-August 2008, a decline of 3.3 percent compared to mid-July 2008. In terms of US dollars, gross foreign exchange reserves declined by 3.4 percent to US$ 3 billion during the period. The current level of reserves is sufficient to cover merchandise imports of 9.4 months and merchandise and service imports of 6.9 months.
As an initial indication of rising investor confidence, domestic credit increased by 1.8 percent during the period as compared to a decline of 0.1 percent last year mainly due to an increase in private sector credit, which grew by 2 percent.