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Inflation in Nepal and Its Impact: Current Situation and Future Challenges

Author

Dipesh Ghimire

Inflation in Nepal and Its Impact: Current Situation and Future Challenges

Kathmandu, September 26, 2024 – Over the past five years, Nepal’s economy has undergone significant changes, especially in key indicators like the Consumer Price Index (CPI), National Wholesale Price Index, and Salary and Wage Rate Index. These indices reflect the state of inflation and economic stability in the country. Recent data show improvements in some areas, but concerns remain in others.

1. Decline in Consumer Price Index (CPI):

  • As of mid-August 2024/25, the CPI growth rate has decreased to 4.10 percent, down from 7.52 percent in the previous year.

  • This indicates positive outcomes from the government's efforts to control inflation.

2. High Food Price Inflation:

  • The Food CPI stands at 6.17 percent, indicating that consumers are still facing high food prices.

  • The persistently high food inflation directly impacts the daily lives of the general population.

3. Improvement in National Wholesale Price Index:

  • The National Wholesale Price Index dropped to 4.34 percent in 2023/24, down from 4.98 percent in 2022/23.

  • By mid-August 2024/25, it further declined to 3.66 percent, indicating a positive trend.

4. Decline in Salary and Wage Rate Index:

  • The Salary and Wage Rate Index fell to 5.36 percent in 2023/24, down from 8.71 percent in the previous year.

  • This suggests a reduction in the purchasing power of workers, potentially leading to increased economic inequality.

5. Future Challenges:

  • Continued efforts are required to control inflation, with a specific focus on stabilizing food prices.

  • The causes of the decline in the Salary and Wage Rate Index need to be studied to find long-term solutions.

  • While the improvement in the Wholesale Price Index is encouraging, economic policies need to be strengthened to maintain stability.

This dual-language analytical article provides a comprehensive look at Nepal's economic indicators, highlighting areas of progress and pointing out the challenges that remain for policymakers and the general public.

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