KATHMANDU: Nepal’s annual inflation rate nearly doubled in the month of Jestha compared to a year ago, even as the country’s external sector strengthened with record remittance inflows, a soaring balance of payments surplus and the highest-ever foreign exchange reserves.
According to the Current Macroeconomic and Financial Situation Report released by Nepal Rastra Bank (NRB) on Monday, year-on-year consumer inflation rose to 5.22 percent in Jestha (mid-June), up from 2.72 percent in the same month last year. However, the average inflation rate for the first 11 months of the current fiscal year stood at 2.89 percent, down from 4.24 percent during the corresponding period of the previous fiscal year.
Price increases were higher in the non-food and services category, where inflation reached 5.37 percent, compared to 4.95 percent in food and beverages.
Among food items, fruit prices surged 17.40 percent, while ghee and edible oils climbed 15.10 percent. Fish and meat prices increased 5.26 percent, vegetables 4.14 percent, while pulses and legumes recorded a slight decline of 0.93 percent.
In the non-food category, prices of miscellaneous goods and services rose 16.68 percent, transport costs increased 15.31 percent, alcoholic beverages 7.20 percent, education 5.54 percent, and clothing and footwear 5.53 percent.
Inflation was higher in urban areas (5.38 percent) than rural areas (4.78 percent). Among provinces, Koshi Province recorded the highest inflation at 5.75 percent, while Sudurpaschim Province had the lowest at 4.61 percent.
Wholesale inflation also accelerated sharply, rising to 8.47 percent from 1.56 percent a year earlier.
Despite rising prices, Nepal’s external sector posted strong gains.
NRB reported that remittance inflows reached a record Rs 2.12 trillion during the first 11 months of FY 2025/26, marking a 38.2 percent increase compared to the same period last year. In Jestha alone, Nepal received Rs 203.89 billion in remittances, following a record Rs 257 billion received in Baisakh.
In US dollar terms, remittances increased 29.6 percent to USD 14.59 billion.
Driven largely by robust remittance inflows, Nepal’s balance of payments (BoP) surplus nearly doubled to Rs 926.06 billion, compared to Rs 491.44 billion during the same period of the previous fiscal year. The current account surplus also widened to Rs 802.06 billion.
Foreign direct investment (FDI) also improved significantly, reaching Rs 22.82 billion, more than double the Rs 11.07 billion recorded a year earlier.
Meanwhile, Nepal’s foreign exchange reserves climbed to a record Rs 3.755 trillion, up 40.3 percent from Rs 2.677 trillion at the end of the previous fiscal year. In US dollar terms, reserves stood at USD 24.68 billion, an increase of 26.5 percent.
According to NRB, the current reserve level is sufficient to finance 22.5 months of merchandise imports and 19.1 months of goods and services imports, indicating a strong external buffer despite mounting inflationary pressures.
Comment