HIGHLIGHTS
In August 2015, retail prices of most food commodities monitored in 12 markets across Nepal showed an upward trend due to the lean season and the interruption of food supplies because of prolonged general strikes (bandhs).
Overall inflation rate in August 2015 was 6.9 percent. The food and beverage group was higher at 7.3 percent, as were several sub-groups: legume varieties (26.4 percent), spices (9.8 percent), milk products and eggs (9.3 percent) and cereal grains (9.1 percent).
Prices
In August 2015, retail prices of food commodities monitored across the country showed an upward trend. On a month-onmonth basis, retail prices of coarse rice and wheat flour increased by 4.8 and 3.4 percent respectively. Prices of black gram and broken lentil increased by 7.5 and 6.9 percent respectively. Prices of soybean oil and chicken meat went up by 0.3 and 3.9 percent respectively. However, the price of red potato remained relatively stable. Compared to three months earlier, most prices showed an upward trend with the exception of edible oils and red potato. Compared to the same period last year, most prices showed an upward trend (with the exception of edible oils and red potato). Overall, the price of most commodities over the past 12 months showed an upward trend with expected seasonal fluctuations, while that of black gram and broken lentil continued to rise since May 2015 (see Figure 1).
Prices in regional markets (see Figure 2) showed similar trends as that seen in the national averages, with an upward trend in nearly all commodities in all markets. However, the price of wheat flour showed a marginal decline in the Terai markets compared to the same period last year.
Wholesale prices regularly monitored by FNCCI/AEC in the five large markets of Birtamod, Kathmandu, Butwal, Surkhet and Dhangadhi showed an upward trend. Wholesale prices monitored in the Kalimati Fruits and Vegetables Market mostly showed a sharp increase month-on-month (see Table 1): prices of green peas, dry onion, pumpkin, pointed gourd, arum, cabbage, smooth gourd, cowpea, carrot and broad mustard leaf increased by more than 15 percent due to a reduction in supply, while that of radish, French bean and christophine decreased by more than 7 percent due to the harvest season.
In August 2015, the overall consumer price index (CPI) released by Nepal Rastra Bank was 106.6 (base year 2014/15=100), an increase of 4.8 percent month-on-month. The inflation rate, as measured by the year-on-year increase in the CPI, was 6.9 percent. The food and beverage group of the CPI was 106.8, an increase of 3.4 percent month-onmonth and 7.3 percent year-on-year; several sub-groups showed higher year-on-year increases: legume varieties (26.4 percent), spices (9.8 percent), milk products and eggs (9.3 percent) and cereal grains (9.1 percent). The non-food and services group of the CPI was 106.5, an increase of 5.9 percent month-on-month and 6.6 percent year-on-year.
Supply
The food supply situation across the country has been frequently disrupted because of the impact of monsoon-induced floods and landslides on roads and transportation services. Moreover, prolonged general strikes (bandhs) called by various political parties and ethnic groups, mainly in the Terai region, have disrupted cross-border trade and the supply of fuel, food and non-food commodities from India and overseas, resulting in a shortage of fuel and daily consumer goods.
Outlook
Most food prices are expected to increase next month due to the continuing lean season and supply disturbances caused by the prolonged general strikes (bandhs) in the Terai and disruptions to cross-border trade.
Despite an increase of planted area overall, paddy production is expected to be lower this year compared to last year due to insufficient rainfall and unavailability of chemical fertilizers during the growing period.