Nepal inflation rate above 14 per cent

Feb 7, 2009, 3:58 GMT

   Kathmandu - Nepalese consumers have been hard hit by the high inflation rate which rose above 14 per cent, Nepal's central bank said Saturday.

   Nepal Rastra Bank (NRB) said the year-on-year consumer inflation rose to 14.4 per cent in the first six months of the current fiscal year which began in mid-July.

   The current inflation rate is nearly three times higher than during the corresponding period last year, the bank said.

   'The rise in the inflation had been attributed to soaring price indices of foods and beverages, non-food items and service groups in the review period,' NRB said.

   The bank said sugar and sugar products saw the highest price rise of 37.3 per cent, while cooking oil rose by 25.6 per cent and cereals by 25 per cent.

   The bank said the price rise had directly hit consumers as the inflation was greatest in essential items and food that people needed to buy daily.

   The rising inflation poses a problem for the Maoist-led government which came to power promising to provide relief to the people.

   Apart from inflation, the government is also struggling to cope with an electricity shortage, prompting state utility providers to impose as much as 16 hours of power cuts each day.

   On Saturday, Nepalese media reports said the power outages could increase further as a long dry spell had resulted in very low water levels in rivers and reservoirs that feed the country's hydro-electricity power plants.

   Analysts say Nepalese economy is facing serious challenges due to a massive fall in production due to power shortage.