Food prices likely to increase

The moderated food price inflation is expected to be challenged by rising fuel prices and its shortage in the coming months.
"Food prices are likely to increase in the coming months due to the rise in fuel prices and high transportation costs," according to a joint report published by UN World Food Programme (WFP), Ministry of Agriculture and Co-operatives, Federation of Nepalese Chambers of Commerce and Industries (FNCCI) and Consumer Interest Protection Forum.
The index of the food and beverage group increased by a mere four per cent in the first half of the current fiscal year which stood at 17.6 per cent during the corresponding period of the previous year. The index of non-food and services group increased by nine per cent during the review period that stood at 6.4 per cent last year, according to the recent macroeconomic report published by Nepal Rastra Bank (NRB).
The rate at which the national price level increased is below the central bank's target of 6.8 per cent for this year. The monetary policy this fiscal year had estimated to contain inflation at seven per cent which NRB revised to eight per cent during the mid term evaluation.
Central bank governor Yubaraj Khatiwada had attributed the declining prices in India as the reason behind the lower price hike rate. However, the continued fuel crisis coupled with the rise in its prices are likely to affect the smooth operation of transportation services affecting the price of the commodities, cautions the report.
In the last two months, the price of petrol and diesel has gone up to Rs 116 from Rs 105 and to Rs 85 from Rs 84, respectively. Higher fuel prices translate to increased transportation costs resulting in the rise in food prices. The supply situation across the country was not disrupted in spite of the few bandhs and due to the normal post harvest period of summer crops. The winter crops are also growing well due to timely winter rains leading to a positive outlook for national food balance.
Prices of most commodities have shown a nominal fluctuation in the past one month as the national average price of coarse rice and wheat flour did not go through much changes.
The price index of vegetables went down by 5.1 per cent in the first six months of the current fiscal year while it had increased by 67.4 per cent during the same period last year. The price index of ghee and oil subgroup witnessed the highest rise of 15.6 per cent during the review period compared to an increase of 0.3 percent in the same period of the previous year.

Food Price inflation
Mid-August — 9.9 per cent
Mid-September — 10.1 per cent
Mid-October — 9.6 per cent
Mid-November — 8.4 per cent
Mid-December — 7.1 per cent
Mid-January — 4 per cent
(Source: Nepal Rastra Bank)