Inflation moderates to 7.5 per cent

The rate of rise in general price level has continued to moderate closer to the target despite supply pressures.

The year-on-year inflation as measured by the consumer price index increased by 7.5 per cent in mid-April 2012 as compared to 10.6 per cent in the same period of last fiscal year, according to the central bank.

Since December 2012, inflation has subsided to less than 7.5 per cent. The monetary policy for this year had targeted to contain inflation at seven per cent this fiscal year.

According to Nepal Rastra Bank's report, the index of food and beverage group increased by 4.6 per cent. Likewise, the index of non-food and services group went up by 10.1 per cent. These indices had increased by 17.3 per cent and 5.3 per cent respectively in the corresponding period of the previous year.

Likewise, the wholesale price index also went through an increment of 6.6 per cent during the review period as compared to a rise of 11.5 per cent in the corresponding period of the previous year. The slowing food price inflation has been attributed by the central bank for bringing down the price rise rate.

Last year, increasing food prices in Nepal, especially caused by the food price inflation in neighbouring India, had made it difficult to bring the price under control despite low monetary expansion. This year by the third quarter, according to NRB, money supply has grown by 13.5 per cent along side an increment in salary and wage index by 21.3 per cent but inflation seems to be almost on target raising doubts.