The Nepalese economy is still experiencing a slow process, with inflation rising by over 15 percent compared to the same period last year. According to the Nepal Rastra Bank (NRB) report, 'Current Macroeconomic and Financial Situation of Nepal,' the year-on-year consumer price inflation was 5.41 percent in mid-January 2025, up from 5.26 percent a year ago. The report covers data from the six months ending in mid-January 2024/25.

In the food and beverage category, inflation was at 7.67 percent, while non-food and service inflation stood at 4.19 percent in the review month. This is an increase from the previous year when the price indices for these groups rose by 5.75 percent and 4.93 percent, respectively.

Within the food and beverage category, the year-on-year price index for vegetables increased by 28.52 percent, ghee & oil by 10.67 percent, pulses and legumes by 9.48 percent, and cereal grains & their products by 7.23 percent. However, the price index for spices decreased by 3.12 percent.

In the non-food and services category, the year-on-year price index for miscellaneous goods & services increased by 9.35 percent, alcoholic drinks by 7.01 percent, clothes and footwear by 6.75 percent, and furnishing & household equipment by 5.29 percent.

During the review month, the year-on-year price index in rural areas increased by 5.68 percent, while in urban areas, it rose by 5.31 percent. By provinces, the year-on-year consumer price inflation in Koshi Province was 6.73 percent, Madhesh Province 5.96 percent, Bagmati Province 5.14 percent, Gandaki Province 4.37 percent, Lumbini Province 4.83 percent, Karnali Province 4.60 percent, and Sudurpashchim Province 5.67 percent.

In the review month, year-on-year consumer price inflation in the Kathmandu Valley, Terai, Hill, and Mountain regions increased to 5.03 percent, 5.60 percent, 5.41 percent, and 5.27 percent respectively.

Wholesale Price Inflation (WPI)

According to the NRB report, year-on-year wholesale price inflation stood at 4.01 percent in mid-January 2025 compared to 3.36 percent a year ago. The year-on-year wholesale price of consumption goods, intermediate goods, and capital goods increased by 6.92 percent, 2.55 percent, and 3.14 percent respectively. The year-on-year wholesale price of construction material decreased by 4.28 percent in the review month.

The year-on-year salary and wage index increased by 2.85 percent in the second quarter of fiscal year 2024-25 compared to 5.56 percent a year ago.

Based on provinces, in the review quarter, the increase in y-o-y salary and wage index in Koshi Province is 1.30 percent, Madhesh Province 4.26 percent, Bagmati Province 1.73 percent, Gandaki Province 2.70 percent, Lumbini Province 3.37 percent, Karnali Province 3.08 percent, and Sudurpashchim Province 7.59 percent.

Merchandise Trade

During the six months of 2024/25, merchandise exports increased 31.8 percent to Rs.98.79 billion against a decrease of 7.2 percent in the same period of the previous year.

Destination-wise, exports to India, China and other countries increased 46.1 percent, 19.7 percent and 1.0 percent respectively.

Exports of soybean oil, tea, polyester yarn and thread, particle board, cardamom, among others increased whereas exports of palm oil, zinc sheet, ginger, readymade garments, herbs, among others decreased in the review period.

During the six months of 2024/25, merchandise imports increased 7.1 percent to Rs.822.37 billion against a decline of 3.1 percent a year ago. Destination-wise, imports from India, China and other countries increased 5.9 percent, 8.9 percent and 9.0 percent respectively.

Imports of crude soybean oil, rice/paddy, transport equipment, vehicle and other vehicle spare parts, sponge iron, edible oil, among others increased whereas imports of petroleum products, crude palm oil, gold, chemical fertilizer, peas, among others decreased in the review period.

Based on customs points, exports from Bhairahawa, Biratnagar, Birgunj, Dry port, Kailali, Krishnan agar, Mechi, Nepalgunj, and Rasuwa customs offices increased whereas exports from all other major customs points decreased in the review period.

On the import side, imports from Bhairahawa, Biratnagar, Birgunj, Jaleshwor, Kailali, Kanchanpur, Krishnanagar, Mechi, Nepalgunj, Rasuwa, Tatopani and Tribhuwan Airport customs offices increased whereas imports from Dry port customs points decreased in the review period.

Total trade deficit increased 4.4 percent to Rs.723.58 billion during the six months of 2024/25. Such a deficit had decreased 2.6 percent in the corresponding period of the previous year.

The export-import ratio increased to 12.0 percent in the review period from 9.8 percent in the corresponding period of the previous year.

During the six months of 2024/25, merchandise imports from India by paying convertible foreign currency amounted Rs.88.56 billion. Such amount was Rs.76.25 billion in the same period of the previous year.