December 15: Consumer price inflation fell to its lowest point in mid-October to mid-November compared to the last 26 months. Earlier in mid-October 2021, inflation stood at 4.24 percent. In the following months, it was above 5.38.

According to the Current Macroeconomic and Financial Situation Report published by the Nepal Rastra Bank on Thursday, the year-on-year (y-o-y) consumer price inflation moderated to to 5.38 percent in mid-November 2023 compared to 8.08 percent a year ago.

In the last fiscal year (FY), Nepal Rastra Bank had set a target of maintaining inflation within the limit of 7 percent. The central bank has set a target of keeping it within 6.5 percent for the current fiscal year.

In mid-October last year, inflation reached as high as 8.5 percent. Inflation increased during the review period after the Nepal Rastra Bank issued a tight monetary policy and tightened import and credit investment.

As the prices of petroleum products, vegetables and vehicles as well as transportation fares decreased this year, inflation has come down considerably.

According to the NRB report, food and beverage inflation stood at 6.01 percent in the review month whereas non-food and service category inflation stood at 4.89 percent.

Under the food and beverage category, y-o-y consumer price index of spices subcategory increased 36.46 percent, sugar and sugar products 14.59 percent, fruit 14.01 percent, cereal grains and their products 12.02 percent and milk products and eggs 11.00 percent. The y-o-y consumer price index of ghee and oil and vegetable sub-category decreased 14.23 percent and 5.35 percent respectively in the review month.

Under the non-food and services category, y-o-y consumer price index of recreation and culture sub-category increased 12.84 percent, miscellaneous goods and services 10.76 percent, education 8.92 percent, furnishing and household equipment 5.27 percent and clothes and footwear 4.96 percent. The y-o-y consumer price index of transportation sub-category decreased 1.86 percent in the review month.

Decline in inflation in India also had a positive impact on Nepal. According to Nepal Rastra Bank, India's inflation in October was 5.55 percent.

Meanwhile, the NRB report shows that there has been a significant improvement in the indicators of the economy as of mid-November this year.

The policies adopted by the government and Nepal Rastra Bank to address the impacts of the global economic recession due to the Covid-19 and the Russia-Ukraine tension has resulted in a significant improvement in macroeconomic indices of Nepal.