INFLATION ON PULSES

CONCEPT OF INFLATION
Inflation is a global phenomenon in a present time. It is one of the most crucial macroeconomic problem for many countries in the world. Inflation is an increase in the overall price level. It happens when many prices increase simultaneously. KEYNES-Inflation as a phenomenon of full employment. CROWTHER-Inflation is a state in which the value of money is falling and prices are rising.

TPES OF INFLATION
On the basis of speed.

On the basis of cause. On the basis of nature.

On the basis of coverage.

On the basis of employment.

 Creeping inflation: When there is price Walking inflation: When creeping

rise by not more than 3% per annum, the situation is called creping inflation.

ON THE BASIS OF SPEED

Running inflation: It would record a

inflation continues over a decade and price rise from 3-4% per annum, it is called walking inflation.

100% rise in general price level over a period of 10 years. Hyper inflation: It is an indicator of serious problem. In it,price rise every moment and every second.

ON THE BASIS OF NATURE

Open inflation: It takes place when increase in price due to lack of any control on expenditure when income increases. It follows the symptom of prosperity.
Supressed inflation: It is the one in which government attempts to supress the inflationary pressure by controlling prices, exchange rates, creation of banks, etc.

INTRODUCTION TO PULSES
The name pulse is derived from the Latin puls meaning thick soup or potage. Many early civilizations developed around diets of pulses for protein, combined with a cereal crop to provide energy. Beans and corn are the example from the Americas, while pita and humus (chickpea based) are a Middle Eastern illustration. Pulses are unique among grain crops in their ability to partner with certain soil bacteria to take nitrogen, an essential plant nutrient, from the air and turn it in to a form that can be used by plants. Pulses are the edible seeds of legumes, like lentils, beans, peas and chickpeas. Each of these pulse crops come in a wide range of colors and sizes.

OBJECTIVES OF THE STUDY

To compute the inflation rates of pulses. To identify the main causes of inflation in pulses. To study the effects of inflation. To identify the measures of inflation control. To analyze the trends of price rise of pulses.

PROBLEM OF THE STUDY

Pulses are the major constituent of Nepalese diet and thus the rise and fall in the price of pulses greatly affects the household economy. There are different reasons leading to the inflationary rises in price of pulses. Finding out price rises in pulses by the computation of inflation rates may be an effective way to trace out the trends of their consumption.Therefore , the study is done in order to extract adequate knowledge on the rate of inflation of pulses in the past few years along with the causes and measures to control them.

LIMITATIONS OF THE STUDY

High frequency data (e.g. monthly, quarterly etc.) are not used in this study because of unavailability of some of the data. Annual data is used.
Since only the case of pulses is considered, a valid generalization of the conclusions drawn cannot be expected.

METHODOLOGY OF THE STUDY

Data source. Data presentation. Data analysis.

DATA SOURCE
The report is all in all based on the secondary data obtained from the economic bulletin of NRB. The sources of the secondary data can be listed as: Nepal Rastra Bank Central bureau of statistics Ministry of Agriculture Research Journals National dailies Other related publications

DATA PRESENTAION
YEAR
1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

CPI (CONSUMER PRICE INDEX)

100 103.3 100.8 117.8 114.9 120.3 117.1 115.4 114.2 119.6 145.6 171.9 186.1 230.2

INFLATION RATE(R)
3.3 -2.42 16.87 -2.46 4.69 -2.66 -1.45 -1.04 4.73 21.74 18.06 8.26 23.69

BAR GRAPH
250 200 150 100 50 0
19 96 /1 99 7 19 98 /1 99 9 20 00 /2 00 1 20 02 /2 00 3 20 04 /2 00 5 20 06 /2 00 7 20 08 /2 00 9

CPI (CONSUMER PRICE INDEX) 100 INFLATION RATE -

-50

FORMULAE FOR INFLATION COMPUTATION

COMPARATIVE DATA ANALYSIS

The inflation rate of pulses in Nepal during the last 15 years is in the state of fluctuation as we can see that in 1996/1997, the inflation rate is3.3% and in 1997/1998, it is 2.42%. Similarly in 1998/1999 and in 1999/2000, the inflation rates of pulses in Nepal are 16.87% and -2.46% respectively. Similarly, the inflation rates during the second 5 years i. e 2000/2001, 2001/2002, 2002/2003, 2003/2004 and 2004/2005 are 4.695, -2.665,1.45%, -1.045 and 4.73 respectively. The inflation rate of pulses in Nepal in 2005/2006, 2006/2007, 2007/2008 and 2008/2009 are 21.745, 18.06%, 8.265 and 23.69% respectively.

CAUSES OF INFLATION ON PULSES

Farmers turning away. Lack of marketing intervention measures. Historical reasons. Too many intermediaries. Working of government agencies. Export of processed pulses.

EFFECTS OF INFLATION ON PULSES

Rise of food commodity as asset class. Difficulty to daily wage earners. Advantage to farmers. Loss to government. Hyper inflation.

CONTROL OF INFLATION ON PULSES

Monetary policies
Fiscal policies
Control in money circulation. Credit control. Public expenditure. Imposition of taxes. Public borrowing. Public debt management.

FINDINGS
During our research on the rate of inflation in the prices of pulses, we visited many places where we can get the accurate results. In comparison to otherfood products (cereals), pulse is one with a great stability in the price fluctuation is 10 to 20%. The longest period of stability of price remained for the second quarter and a month in 2010, i.e, (May-Sep) where the retail price remained Rs.120/kg in Kathmandu valley. But still, during the year 2010,the price fluctuation was recorded to be 20% in Kathmandu. While comparing the urban CPI, the price is stable more in Terai than in Hills.

CONCLUSION
No doubt, inflation in Nepal has hit severely on the stomach of Nepalese people, low-income class, generally. But the effect of inflation in pulses is relatively less in comparison to other food items. This implies the sporadic inflation in Nepalese cereals market. Though a small change in price alters the consumption pattern of the low-income people, pulse has not raised their cost of living significantly. But anyway inflation is inflation. However, the inflation in case of pulse can be considered as moderate, which comprises the factor to operate the economy smoothly.

TEAM MEMBERS OF GROUP-F

Manisha Thapa Pratikshya Rijal Rajendra Gautam Sonia Shrestha Sushmita Baidya

BBA 2nd Semester Section-A