Inflation touches double-digit mark

KATHMANDU, Dec 15:

Price inflation reached double-digit digit mark of 10 percent point in mid-November from 8.4 per cent in mid-October, according to the macroeconomic report made public by the Nepal Rastra Bank on Friday. Inflation had increased by 10.5 per cent in the corresponding period last fiscal year.

Economist Chiranjibi Nepal attributes this to the “heavy flow” of money in the market in recent months due to the recently held Constituent Assembly polls.

 “The budget was introduced in time, which boosted the government spending. The election was held on time. All these led to flow of a whopping Rs 40 billion in the market over the last four months,” said economist Nepal, adding that the excessive liquidity in the market was the main reason behind double-digit inflation.
The government spent Rs 14 billion for the CA polls.

Major festivals, like Dashain, Tihar and Chhath festival, which occurred during the months also led to inflation as consumer spending generally goes up during festivals.
However, senior economist Dr Biswambhar Pyakuryal does not agree that the flow of money during the CA polls is a cause of inflation.

“The liquidity flow during the CA election is not the cause for inflation,” Dr Pyakuryal argued. We have to wait at least six to nine months to see the impact of this liquidity in the market, he added.

The price of vegetable sub-group that went up by 35.3 per cent pushed the index of food and beverage group to 13.5 per cent. Likewise, prices of non-food and services group also surged 6.9 per cent during the review period.

The Tarai region observed the highest inflation of 10.6 per cent followed by Kathmandu and Hilly region with 10.4 and 8.4 per cent respectively.

    
 Source: Republica