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Food Inflation in Nepal and Its Implications

  • Ramesh SharmaEmail author
Chapter

Abstract

This chapter presents an overview of the long-term trends in food and non-food inflation, and estimates the relative contributions of various food products to overall food inflation. Key findings are that the underlying character of inflation in Nepal changed fundamentally since around 2007 with food inflation becoming much more prominent and a large contributor to overall inflation, vegetables were the top contributor to food inflation, and that food prices are strongly cointegrated with Indian prices, but not non-food price. Unrecorded informal trade with India should explain much of the close price linkages. Food prices tend to be more volatile during periods of high prices and ensuring price stability is a matter of great concern. Further, price surges do not necessarily lead to positive supply response.

Abbreviations (Food Inflation in Nepal chapter)

ADF

Augmented Dickey–Fuller (test)

CPI

Consumer price index

CPI-IW

Consumer price index for industrial workers (India)

ECM

Error-Correction Model

FY

Fiscal year

GoI

Government of India

GoN

Government of Nepal

ICBT

Informal Cross-border Trade

NLSS

Nepal living standards survey

NRB

Nepal Rastra Bank

p.a.

Per annum

WPI

Wholesale Price Index

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Copyright information

© Springer Nature Singapore Pte Ltd. 2019

Authors and Affiliations

  1. 1.Food and Agriculture Organization (FAO)KathmanduNepal

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