Nepal's inflation hits seven year high in January

Nepal's inflation rate reached nearly seven year high of 12.1 percent in January due to prolonged strikes in the Tarai region and disruption on trade routes in the southern parts of the country, Nepal's central bank said on Sunday.

It is the first time that inflation in Nepal crossed 12 percent after June 2009, according to Nepal Rastra Bank (NRB), the central bank of the country. The last time when inflation was higher than now was in May 2009 when it stood at 12.4 percent.

Nepal faced four and half month long blockade in its southern border crossings causing supply disruptions not only of imported goods but also the delivery of goods within the country due to shortage of fuel.

Nara Bahadur Thapa, chief of research department at NRB said that supply constraints created gap between demand and supply causing double digit inflation. Most of the food items witnessed double digit price rises in January with prices of pulses and cooking oil spiking the most.

Pulse price soared by 46.9 percent, which according to Thapa, is due to supply constraints as well as its soaring prices in India where its production decreased massively in 2015.

Likewise, prices of cooking oil soared by 31.3 percent due to disruption in supply of its raw materials which are imported from far away countries like Argentina and Brazil, according to NRB.

From among the non-food items, prices of clothes and footwear soared highest of 13.7 percent. Their prices increased massively as delivery of cheaper Chinese footwear and garments to Nepal was disrupted from both land and sea route, said Thapa.

Usually, Nepalese traders import cheaper Chinese goods through bordering Chinese Khasa market but the road reaching there from Kathmandu has not been operational since deadly earthquake hit the area last year.

Supply of these goods through the sea route was also disrupted due to obstruction in Nepals southern border crossings, said Thapa. Endit