Thursday, November 22, 2007

Inflation goes up by 7 percent

The vegetables became more expensive this year in comparison to last year. “The prices of vegetables and fruits rose by 26 per cent, pulses by 17.8 per cent, spices by 13.2 per cent, oil and ghee by 11.9 per cent and grains and cereal products by 9.8 per cent,” a report from Nepal Rastra Bank (NRB) stated.
The price rose in Tarai, the Hills and Kathmandu valley by 7.5 per cent, 6.8 per cent and 6.3 per cent respectively.
However, the salary and wage rate index have also gone up by 12.5 per cent in mid-September 2007 compared to a rise of 7.6 per cent a year ago. Due to the rise in prices, year-on-year inflation has risen to seven per cent in mid-September 2007 from 6.6 per cent in mid September 2006.
However, remittance has decreased as it posted a rise of only 17.3 per cent against an increase of 30.6 per cent, in comparison to the corresponding period of the last fiscal year, according to NRB. Similarly, in the first two months of 2007-08, total government spending has increased by 13.5 per cent to Rs 11.14 billion. The government expenditure had increased by 22.5 per cent in the corresponding period of the previous fiscal year. The decline in the growth was due to a decrease in the growth of recurrent expenditure.
However, revenue mobilisation has decelerated in the review period. Revenue mobilisation has pos-ted 15.4 per cent to Rs 12.42 billion in comparison to 22.3 per cent in the corresponding period last year.
In the review period, the budget remained at a surplus of Rs 2.56 billion. However, the report stated that exports have declined by 5.9 per cent in contrast to a rise of two per cent in the corresponding period of the previous year.
“Export to India has decreased by 8.7 per cent and exports to other countries remained at a similar level in contrast to a rise of 1.2 per cent in the comparable period of the previous year. The decline in the exports to India was mainly attributed to the decrease in the exports of vegetable ghee, thread, textiles, toothpaste and wire. Similarly, exports to other countries took a downward trend owing to the lower exports of woolen carpet, pashmina, and tanned skin.Total imports increased by 10 per cent in comparison to 9.7 per cent hike in the corresponding period of the previous year. While imports from India went up by 3.5 per cent in the review period compared to a growth of 14.5 per cent in the corresponding period of 2006-07.
A rise in the import of vehicles and spare parts, cold rolled sheet in coil, MS billet, thread and hot rolled sheet in coil from India and substantial increase in the import of gold followed by telecommunication equipment and parts, transport equipment and parts, electrical goods and silver among others, from other countries led to the rise in total imports.
The overall balance of payments (BoP) recorded a deficit of Rs 2.68 billion. However, it had registered a surplus of Rs 758 million during the corresponding period of last fiscal year.
Indian currency equivalent to Rs 11.71 billion has been purchased through a sale of $180 million in the review period. “The purchase of IC went up due to widening trade deficits with India,” the report stated

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