Consumer price inflation, foreign reserves up

By A Staff Reporter,Kathmandu, Jan. 11: The rate of consumer price inflation has gone up to 6.05 per cent in mid-December 2024 compared to 4.95 per cent during the same period in 2023. 

Inflation reached the highest in Koshi Province at 7.36 per cent, followed by Madhes at 6.77 per cent and Sudurpaschim at 6.66 per cent, according to the monthly economic and financial status report published by the Nepal Rastra Bank (NRB) on Friday.

 Among the provinces, it remained the lowest – 4.19 per cent - in Karnali, followed by 4.81 per cent in Gandaki, 5.53 in Lumbini and 5.84 in Bagmati. 

Food and beverage pushed the inflation rates up with vegetables, pulses and cereals leading the category. Food and beverage inflation stood at 9.99 per cent whereas non-food and service inflation stood at 3.92 per cent in mid-December. During the same period in the previous year, the price indices of these groups had increased by 5.00 per cent and 4.92 per cent, respectively.

The year-on-year price index of the vegetable sub-category increased by 43.05 per cent, pulses and legumes by 10.66 per cent, cereal grains and their products by 9.70 per cent and ghee and oil by 9.39 per cent while the price index of the spices sub-category decreased by 1.18 per cent and sugar and related products by 0.83 per cent.

Under the non-food and services category, y-o-y price index of the miscellaneous goods and services sub-category increased by 7.98 per cent, alcoholic drinks by 7.01 per cent, clothes and footwear by 6.75 per cent and furnishing and household equipment by 5.29 per cent.

Likewise, the foreign exchange reserves increased by 11.4 per cent to Rs. 2273.26 billion in mid-December 2024 from Rs. 2041.10 billion in mid-July 2024. 

Of the total foreign exchange reserves, the reserves held by NRB increased by 10.0 per cent to Rs.2033.27 billion in mid-December 2024 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased by 24.6 per cent to Rs. 240 billion in mid-December 2024 from Rs.192.55 billion in mid-July 2024. 

Similarly, the share of Indian currency in total reserves stood at 22.8 per cent in mid-December 2024.

According to the NRB, based on the imports of five months of 2024/25, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 17.6 months and merchandise and services imports of 14.6 months. 

The ratio of reserves to Gross Domestic Product and reserves to imports stood at 39.8 per cent and 121.6 per cent respectively in mid-December 2024. Such ratios were 35.8 per cent and 108.6 per cent in mid-July 2024.

Meanwhile, remittance inflows increased by 4.4 per cent to Rs.640.43 billion in the review period compared to an increase of 24.2 per cent in the same period of the previous year. 

In US Dollar terms, remittance inflows increased by only 2.5 per cent to 4.73 billion compared to an increase of 21.1 per cent in the same period of the previous year.

Likewise, Balance of Payments (BOP) remained at a surplus of Rs. 225.34 billion in the review period compared to a surplus of Rs. 216.05 billion in the same period of the previous year.