Inflation at 8.9pc, budget deficit rises

The year-on-year consumer inflation stood at 8.9 percent in mid-April 2008 compared to 5.6 per cent in the corresponding period last year.
The inflation was mainly driven by the significant rise of 12.6 per cent in prices of food and beverages in the review period, according to the current macroeconomic situation based on the first nine months' — the third quarter (Q3) — data of this fiscal year.
"Of the items in the index of food and beverages group, the prices of oil and ghee, grains and cereal product and pulses increased by double digit," states the central bank. For example, the price indices of oil and ghee sub-group increased by a whopping rate of 33.8 per cent on year-on-year basis. Prices of rice and rice product of this sub-group increased by 25 per cent (y-o-y) compared to 4.9 per cent a year ago.
Similarly, the budget also remained at the deficit of Rs 5.29 billion in Q3 of the current fiscal year. "The budget was at the surplus of Rs 4.2 billion in the same period last year. The relatively higher growth of government expenditure resulted in the budget deficit in the review period," states the NRB report.
The government expenditure, on a cash basis, increased by 31.5 percent to Rs 90.32 billion in mid-April 2008 compared to an increase of 13.3 percent in the same period last year. The increase in government expenditure was on account of the rise in all three heads of government expenditures — recurrent, capital and principal repayments.
On the external front, the declining merchandise export has been a matter of concern. In Q3, total exports went down by 2.6 per cent in comparison to a decline by 2.9 per cent in the corresponding period last year. "In the review period, export to India plummeted by 8.3 per cent and to other countries increased by 10.3 per cent," NRB report states.
However, the overall BoP posted a surplus of Rs 13.68 billion in Q3 of current fiscal year. The BoP had registered a surplus of Rs 10.89 billion in the corresponding period last year.