Kathmandu, September 19: Inflation rose sharply in the first month, Shrawan, of the current fiscal year 2083/84. According to the economic and financial situation report released by Nepal Rastra Bank on Friday, the inflation rate reached 5.96 percent in Shrawan, the highest level in the past one and a half years. Previously, the inflation rate had stood at 6.05 percent in Mangsir 2081. In Shrawan last year, the rate was only 1.68 percent.
According to the report, inflation in the food and beverage group stood at 6.77 percent in Shrawan, while inflation in the non-food and services group was 5.52 percent. In the same month last year, inflation in the food and beverage group was negative 2.28 percent, while inflation in the non-food and services group stood at 3.95 percent.
During the review period, within the food and beverage group, the consumer price index of the ghee and oil sub-group increased by 15.62 percent, fruits by 15.39 percent, fish and meat by 8.65 percent, vegetables by 6.90 percent, and spices by 4.80 percent.
External sector continues to strengthen
According to the report, Nepal’s external economic and financial sector has continued to strengthen. Rising remittances, a high current account surplus and a positive balance of payments have pushed the country’s foreign exchange reserves to their strongest level ever. Although economic activity within the country has not increased as expected, recent data show that the country’s external financial reserves are continuing to build up.
According to Nepal Rastra Bank data, total foreign exchange reserves stand at Rs 3.946 trillion and have reached US$25.84 billion. The reserves are sufficient to cover 18.8 months of imports of goods and services. Similarly, the current account has recorded a surplus of Rs 94.59 billion, while the balance of payments has posted a surplus of Rs 90.34 billion. Exports have increased by 61.7 percent and imports by 31.0 percent.
Deposits mobilized by banks and financial institutions declined by 0.3 percent, while credit extended to the private sector increased by 0.4 percent. On a year-on-year basis, deposit growth stood at 14.5 percent, while credit growth to the private sector was 7.0 percent.
The weighted average interbank rate among banks and financial institutions stood at 2.75 percent. The weighted average deposit interest rate of commercial banks was 3.15 percent, while the weighted average lending interest rate was 6.48 percent.
Remittances reach record high
Remittance inflows increased by 21.2 percent to Rs 215.05 billion in the first month of the current fiscal year. This is the highest remittance inflow recorded in any single month so far. During the review period, remittance inflows in US dollar terms increased by 10.2 percent to US$1.40 billion. In the same period last year, remittance inflows had increased by 25.0 percent.
During the period, the number of Nepalis obtaining final labour approval for foreign employment (institutional and individual new approvals) stood at 42,693, while 27,748 obtained renewed labour approvals. In the corresponding period last year, the respective figures were 44,466 and 23,644.
(Gorkhapatra Daily)
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