Inflation hits 7-year high of 12.1 percent

- Post Report, Kathmandu

Feb 22, 2016-

As a result of Tarai strikes and disruption of trade routes, inflation rate reached nearly seven year high of 12.1 percent in mid-January, Nepal Rastra Bank (NRB) said on Sunday.

This is the first time the rate has crossed 12 percent since mid-June 2009.

Nara Bahadur Thapa, chief of NRB’s research department, said the supply disruption created a gap between demand and supply, resulting in price hikes.

The four-and-half-month blockade not only disrupted imports, but also the delivery of goods within the country due to fuel shortages.

Most of the food items witnessed double-digit price rise in mid-January, with the prices of pulses and cooking oil skyrocketing buy 46.9 percent and 31.3 percent, respectively. Thapa said the blockade was not the only factor pushing up the prices of pulses. “It was also due to the rise in the prices in the Indian market due to a fall in the production there.” 

According to Indian media reports, output of pulse in India dropped by 12 percent in 2014-15.

As far as the rise in the cooking oil prices is concerned, disruption in supply of raw materials that come to Nepal from the countries like Argentina and Brazil was the major contributing factor, Thapa said.

Among the non-food items, prices of clothes and footwear soared by 13.7 percent, followed by housing and utilities (up 12.9 percent). “The prices of footwear and clothing increased as cheaper Chinese goods could neither come through the Tatopani-Khasa border points nor through the sea route,” said Thapa.

Nepali traders import cheaper Chinese goods through bordering Chinese market of Khasa. The Tatopani-Khasa trade route has not come into operation since the April 25 earthquake damaged the road.

Supply of these goods through the sea route also could not happen due to the obstructions at southern border crossings. 

Location wise, the Kathmandu Valley saw the steepest price rise of 13.8 percent, followed the hilly region (12.1percent). The inflation rate in Tarai and mountain regions stood lower, according to NRB.

Thapa said it was natural for the Valley to see the highest price rise as it is the largest consumption centre of the country with little local production.

inflation compared

Month    RAte

Mid-Aug    6.9pc

Mid-Sept    7.2pc

Mid-Oct    8.2pc

Mid-Nov    10.4pc

Mid-Dec    11.6pc

Mid-Jan    12.1pc

Published: 22-02-2016 08:34

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