Country’s inflation cooled down to 7.1 percent in mid-May 2015, compared to 9.7 percent in the corresponding period of fiscal year 2013/14.
The ‘Current Macroeconomic Situation of Nepal Based on Ten Month’s Data of 2014/15’ issued by Nepal Rastra Bank (NRB) on Friday showed that the inflation dropped as the indices of food and beverage group and non-food and service group came down in the review period.
According to the report, the indices of food and beverage group and non-food and service group increased by 8.9 percent and 5.4 percent, respectively, in the review period compared to 12.9 percent and 7.0 percent in the same period 2013/14.
NRB officials attributed the drop in inflation to low demand for food commodities and other products after April 25. “The April 25 earthquake resulted to decline in consumption rate of food and other essential goods, thereby creating mismatch between demand and supply,” Min Bahadur Shrestha, NRB spokesperson told Republica, adding, “This helped the inflation to cool down.”
Under the food and beverage group, price index of tobacco products sub-group increased by the highest rate of 26.6 percent compared to a rise of 25.3 percent in the corresponding period of previous fiscal year. Similarly, price indices of legume varieties sub-group and hard drinks sub-group went up by 24.5 percent and 21.1 percent, respectively, compared to a growth of 6.6 percent and 22.5 percent in the corresponding period 2013/14. Under non-food and services group, price index of clothing and footwear increased by 12 percent during the review period compared to a rise of 11 percent in the same period of last fiscal year.
REVENUE COLLECTION DECLINES
Revenue mobilization grew by mere 11.7 percent to Rs 312.94 billion during the review period. Revenue had risen by 19.4 percent to Rs 280.04 in the corresponding period of previous fiscal year. “Slow growth of VAT, customs revenue and decline in non-tax revenue accounted for dismal revenue growth in the review period,” the NRB report states.
TRADE DEFICIT CONTINUES TO GROW
Total trade deficit in the first 10 months of current fiscal year increased by 10.1 percent to Rs 557.13 billion. The grow rate, however, is lower compared to corresponding period when trade deficit had ballooned by 28 percent.
The report shows trade deficit with India, China and other countries increased by 3.8 percent, 44.9 percent and 11.5 percent, respectively, during the review period. Such deficits had increased by 29.6 percent, 15 percent and 30.7 percent, respectively, in the same period of last fiscal year.