The consumer price level has increased by over seven percent in the first two months of the current fiscal year, a report by the Nepal Rastra Bank said on Tuesday. Geographically, the prices increased by 7.5 percent in terai, 6.8 percent in hills and 6.3 percent in Kathmandu valley.

The central bank¢s report said the country faced 5.9 percent decline in foreign exports while imports have increased by almost 10 percent.The report further stated that the prices of vegetables and fruits rose by 26 percent, pulses by 17.8 percent, spices by 13.2 percent, oil and ghee by 11.9 percent and grains and cereal products by 9.8 percent.

The bank cited frequent strikes in terai and landslides in hills that blocked highways as the major causes of inflation.Compared to 7.6 percent last year, the salary and wage rate index until mid September have also gone up by 12.5 percent.

In contrast, the growth rate of remittance has declined. While it witnessed over 30 percent increase last year, this year it posted a rise of only 17.3 percent.The NRB report further stated that in this period the government expenditure has increased by 13.5 percent compared to 22.5 percent last year. Likewise revenue mobilisation has also dropped. It posted 15.4 percent increase this year to Rs 12.42 billion while the increase was 22.3 percent in the corresponding period last year. NRB said the budget surplus has reached Rs 2.56 billion.

Exports to India have decreased by 8.7 percent and exports to third countries have remained stagnant against a rise of 1.2 percent last year.Exports of vegetable ghee, thread, textiles, toothpaste and wire to India have decreased during this period while to third countries, downward trend in exports is seen in woolen carpet, pashmina, and tanned skin.

Import of vehicles and spare parts, cold rolled sheet in coil, MS billet, thread and hot rolled sheet in coil from India has increased and gold, telecommunication equipment and parts, transport equipment and parts, electrical goods and silver from third countries fueled rise in total imports.

Nation experienced a deficit of Rs 2.68 billion in overall balance of payment during this period. It had registered a surplus of Rs 758 million last year.