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Inflation Cools, Economic Growth Target to be Met

NRB’s Five-month Macroeconomic Report

  1 min 58 sec to read

January 17:  The Nepal Rastra Bank (NRB) has said that the consumer prices have cooled in the first five months of the current fiscal year 2016/17.  In its macroeconomic update of the first five months of the current FY, the central bank has stated that the inflation rate has declined to 3.8 percent compared to the same period last FY.

 According to the report, the inflation was 11.6 percent in the last FY last and stood at 4.8 percent until October the current FY. NRB mentioned increasing of production activities in the country, ease in the supply system alongside the effective government monitoring of the market as factors attributing to the lowering of the inflation rate.

Region wise, Kathmandu valley has the least inflation at 2.5 percent. “This means that the market monitoring was effective,” says one economist. As per the report, inflation rate in the hilly areas stood at 5.5 percent during the period while it was 3.7 percent in both mountainous regions and Terai plains.

According to NRB, inflation in the food and non-food groups during the period were logged at 0.6 percent and 6.5 percent respectively. The food inflation and non-food inflation were 14.8 percent and 9.1 percent in the corresponding period of the last FY. 

 In the current FY, the price of ghee and  edible oil have come down by the highest 20.5 percent while it was lowest in pulses and beans at 6.6 percent.  In fruit and food items, the prices came down by 2.4 percent and 1.1 percent respectively. However, the report points out that the inflation surged by 14.7 percent and 11.6 percent in sugar, sugar related products and alcoholic beverages respectively. 

According to NRB, the cooling of the inflation rate has also indicated that the economic growth could be attained as targeted by the budget and monetary policy of the current FY.

 The report states that targeted economic growth rate could be achieved in view of the favorable weather, improvement in energy supply and accelerating reconstruction works and steadily increasing remittance inflow. “More than expected agricultural growth could support attaining the target of economic growth in 2017,” NRB said in the report.  

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