Nepal annual inflation spikes, adding to govt’s woes ahead of election

Nepal annual inflation spikes, adding to govt's woes ahead of election

KATHMANDU : Nepal’s annual retail inflation rate accelerated to 8.26 per cent for the month to the middle of August, central bank data showed on Thursday, adding to the government’s problems ahead of the annual festival season.

The reading – the highest in nearly six years – picked up from 8.08 per cent the previous month and was nearly double the 4.35 per cent rate a year earlier, data released by Nepal Rastra Bank (NRB) showed.

Rising prices of basic commodities add to the woes of Prime Minister Sher Bahadur Deuba’s government, which faces national and provincial elections in November.

Food and beverage inflation stood at 7.11 per cent whereas non-food and service inflation stood at 9.18 per cent in the latest month, it said.

Gross foreign exchange reserves decreased 1.2 per cent to 9.42 billion dollars in mid-August 2022 from 9.54 billion dollars in mid-July 2022 – sufficient to support the imports of eight months, the bank said.

Though total reserves decreased, the adequacy ratio increased because overall imports fell, Prakash Kumar Shrestha, head of the central bank’s Economic Research Department, said.

Officials said economic indicators had begun to improve owing to measures taken by the government to bring the economy on track.

The government banned the import of 10 luxurious goods including cars, televisions, mobile sets, playing cards, cosmetics and liquor in April amid dwindling foreign exchange reserves.

It has since lifted the ban on some goods but imports of cars, televisions, mobile sets and liquor remain banned.

In July, the central bank raised its benchmark interest rate at which it lends to commercial banks to 8.5 per cent from 7 per cent as part of efforts to tame inflation and warned about pressure on declining forex reserves.

“These measures have shown a positive impact and economic indicators have started to rebound,” said Manarishi Dhital, an aide to Finance Minister Janardan Sharma.

Residents said inflation was a major concern as prices of basic commodities are rising due to the Russia-Ukraine war.

“If the prices of goods of daily consumption continue to rise we will have a hard time to support the family ahead of the annual festival season starting next month,” said Binod Shrestha, a truck driver.

Leave a Reply

Your email address will not be published.