Consumer Price Inflation (CPI) in Nepal has significantly moderated in the first month of Fiscal Year 2024/25, reaching 4.1% year-on-year in mid-August. This contrasts sharply with the 7.52% inflation rate from the same period last year, as reported by the Nepal Rastra Bank (NRB). The central bank has set an inflation target of 5% for this year.
Inflation in food and beverages is recorded at 6.17%, while non-food and service inflation stands at 2.94%. For comparison, these rates were 8.90% and 6.62%, respectively, in the previous year.
Notably, specific categories experienced varying price changes: the price index for vegetables increased by 19.07%, pulses and legumes by 12.09%, and cereal grains by 9.15%. In contrast, spice prices decreased by 2.75%. Miscellaneous goods and services saw a 7.94% increase, with alcoholic drinks rising by 5.38% and clothing by 4.58%.
Inflation rates were slightly higher in rural areas at 4.28% compared to 4.03% in urban areas. Across provinces, the year-on-year CPI varied, with Koshi at 4.61% and Sudurpaschim at 6.69%.
The NRB has updated the base year for the CPI from 2014/15 to 2023/24, using data from the fourth Nepal Living Standard Survey. In the new index, food and beverages account for 35.49% of the weight, while non-food and services comprise 64.51%.
Remittance Inflows Increase
Remittance inflows rose by 18.0% to NPR 136.93 billion in the first month of this fiscal year, a slight decrease from last year’s 22.8% growth. In U.S. dollar terms, inflows reached $1.02 billion, up from $879.8 million the previous year. The number of Nepali workers approved for foreign employment also increased, with 36,928 first-time approvals and 22,647 re-entries.
Forex Reserves Up by 2.5%
Gross foreign exchange reserves rose by 2.5% to NPR 2,092.22 billion in mid-August 2024. The share of Indian currency in these reserves was 22.6%. The reserves are now sufficient to cover prospective merchandise imports for 16.7 months and total imports (merchandise and services) for 13.5 months, providing a solid buffer for the economy.
