Inflation continues to stare at consumers

Despite low increment in salary and wages and money supply compared to last fiscal year's same month, the mid-April of the current fiscal year, however, witnessed higher inflation failing the economic theory.
"The year-on-year Consumer Price Index inflation increased by 9.5 per cent in the nine month compared to 7.5 per cent same period of a fiscal year ago," said central bank's report for the nine months of the current fiscal year. "The money supply — that is also one of the causes of inflation — increased by 8.3 per cent in mid-April compared to 13.5 per cent in the same months of the last fiscal year," it said, adding that the year-on-year salary and wage rate index increased by 7.3 per cent compared to an increase of 21.3 per cent a year ago. But slowdown of both — salary and wages index and money supply — could not stop the inflation from looking up.
"The salary index remained unchanged compared to an increase of 19.3 per cent in the same month of the previous year but wage rate index has, however, increased by 9.1 per cent compared to a rise of 21.8 per cent in the same month a year ago."
The indices of wages of agricultural labourers, construction labourers and industrial labourers increased by 12.2 per cent, 6.8 per cent and 3.4 per cent, respectively against an increase of 17.4 per cent, 23.1 per cent and 31.6 per cent, respectively in the same month of the last fiscal year, it added.
The Nepal Rastra Bank (NRB) attributed food and beverage group that posted an increase by 10.3 per cent against the 4.6 per cent in the same period last fiscal year for the rise in inflation.
Likewise, price index of meat and fish sub-group — under the items of the food and beverage group — increased by higher rate of 16.2 per cent compared to an increase of eight per cent in the same month of last fiscal year. "The price indices of cereals, grains and their products and legume varieties also increased by 13.5 per cent and 11.8 per cent against decrease by three per cent and one per cent in the same month of the last fiscal year," the data revealed.
The price index of education sub-group — within the group of non-food and services — increased by 12.5 per cent compared to an increase of 8.9 per cent in the same month of last fiscal year. "Similarly, the price index of communication, which had decreased by 7.1 per cent in the same month of the last fiscal year, witnessed a further decline of 0.8 per cent in the nine months," the Nepal Rastra Bank (NRB) said, adding that region-wise, the price indices increased at 10.3 per cent in the Kathmandu valley followed by 9.3 per cent in Terai and 8.8 per cent in Hill against increments of 6.4 per cent, 7.8 per cent and 8.4 per cent, respectively in the same month of the last fiscal year.

Macroeconomic situation in mid-April
Indicators — mid-April 2013 — mid-April 2012
Inflation — 9.5 per cent — 7.5 per cent
Salary and Wages — 8.3 per cent — 13.5 per cent
Money Supply — 8.3 per cent — 13.5 per cent
Govt spending — 0.2 per cent — 19.1 per cent
Revenue mobilisation — 22.3 per cent — 18.1 per cent
Budget surplus — Rs 47.20 billion — Rs 24.52 billion
Exports — Rs 57.16 billion — Rs 55.24 billion
Imports — Rs 408.83 billion — Rs 339.84 billion
Trade deficit — Rs 351.67 billion — Rs 284.60 billion
BoP Surplus — Rs 30.77 billion — Rs 92.55 billion
Forex reserve — Rs 474.16 billion — Rs 386.96 billion
Remittance — 21.9 per cent (Rs 302.58 billion) — 36.5 per cent (Rs 248.18 billion)
(Figures in per cent are increment compared to the same period of previous fiscal year. Source: Nepal Rastra Bank)