In mid-May the prices of food and beverages, which make up some 47 percent of total consumption basket, grew at a lower rate of 7.1 percent, bringing some respite to consumers, according to Nepal Rastra Bank (NRB). [break]However, they faced difficulties in managing non-food items and services, which make up over 53 percent, as their prices recorded double digit growth.
“Clothing and footwear became expensive by 15 percent, health services became dearer by 7.7 percent and education also became expneisve by 8.9 percent,” reads the latest report on macro-economic situation that the central bank released on Thursday.
The prices of furnishing and household utilities also rose by 13.7 percent in mid-May, compared to what they were priced a year ago, and the cost of commuting also rose by 18 percent
Apart from weakening of the rupee, which rendered imports expensive, and rise in fuel prices, which raised transportation cost, the central bank has also attributed strikes and bandas for sudden rise in inflation. In mid-April, inflation stood at 7.5 percent.
During the 10 months, Nepal also received remittances worth Rs 282.02 billion from overseas workers. The receipt was well over 36 percent rise in remittances that the country received in the same period last year.
Foreign direct investment flowing in the country also grew by 27.4 percent and touched Rs 7.31 billion over the first 10 months of 2011/12.
As a result of sharp rise in remittances received and improvements in service accounts, the country enjoyed current account surplus of Rs 44.75 billion. Balance of payments too remained at a surplus of Rs 100.10 billion.
Despite gloom running deep in the crucial industries, Nepal´s export earning grew by more than 16 percent and crossed over Rs 60.89 billion -- thanks to strengthening of the US dollar.
However, exports also grew by more than 19 percent and touched Rs 383.01 billion. As a result, country´s trade deficit further widened by almost 20 percent and remained at Rs 322.12 billion.
Major exports to India that consumes well over two-thirds of the country´s outward trade were textiles (Rs 4.05 billion), jute goods (Rs 3.41 billion) and polyster yarn (Rs 3.11 billion). However, with exports to third countries crossing over Rs 5.68 billion, woolen carpet was recorded as the largest exports of the country in the first 10 months of 2011/12.
Exports of readymade garment also grew by 40 percent to Rs 3.47 billion, while pashmina fetched in Rs 2.58 billion.
Largest imports of the country, on the other hand, were petroleum products (Rs 77.07 billion), gold (Rs 21.50 billion), MS billet (Rs 15.89 billion) and vehicles and spare parts (Rs 14.60 billion).
Despite huge trade deficit, total foreign currency holding of the country rose to Rs 405 billion in mid-May, recording a growth of almost 50 percent compared to mid-July 2011 figure. “This reserve is enough to finance merchandise and services for almost 10 months,” states the NRB report.
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