November 22: Nepal's inflation is expected to reach double digit next year, according to the Inflation Expectation Survey released by the Nepal Rastra Bank (NRB). The survey was conducted by the central bank from October 3 to 8.

The survey has revealed that the mean inflation and median average inflation are expected to reach 10.3 percent and 9 percent respectively in the next one year. In the next three months of the current fiscal year, mean and median inflation expectations remain at 9.6 percent and eight percent respectively. 

Executive Director of NRB Dr Prakash Kumar Shrestha, who heads the Economic Research Department of the central bank, said people surveyed in the report expected price hikes in the coming months. Inflation expectation has been determined on the basis of the response given by market consumers. However, it is the report on the current macroeconomic and financial situation of the country that determines if the inflation occurs accordingly or not. 

The recent macroeconomic and financial situation report of the central bank had projected an average inflation of 9.4 percent in September. 

The inflation expectation varies according to the age of the customer. Consumers of 25 years of age expect average inflation to reach 10.6 percent in the next three months and 10.3 percent in the next one year. Similarly, customers above 56 years of age have said that the inflation will rise to 11.2 percent in the next three months and 12.2 percent in one year.

Similarly, inflation forecasts vary from city to city. Consumers in Birgunj expect price hikes to reach 12.5 percent in the next three months and 13.4 percent in one year. Similarly, customers of Nepalgunj expect inflation to rise to 5.9 percent in the next three months and also 5.9 percent in one year.

Most of the world's central banks conduct inflation expectation survey. NRB has also been conducting such surveys since January last year. This is the second survey conducted by NRB. According to Shrestha these surveys make it easier to formulate necessary policies and change policies based on the results of such surveys.

Source: Nepal Rastra Bank