The corresponding figure for producer price index was 1.66 percent

NSB: The price of goods and services increased by 6.26 percent between January last year to January this year as measured by consumer price index (CPI).

However from producer  price index (PPI), the country registered an inflation of 1.66 percent in the fourth quarter last year.

PPI is the price at which producers sell goods to wholesale dealers, and thus called ex factory price.

This means that the price of goods and services for domestic producers increased by 1.96 percent in October, dropped to 1.50 percent in November, and again increased to 1.53 percent in December, as compared to the same months of the previous year (2013).

But consumers felt a corresponding increase in price by 7.03 percent, 6.62 percent and 6.38 percent in the same period.

Unlike the CPI, which measures price change from the consumers’ perspectives, PPI measures price change from producers’ perspective.

But PPI in Bhutan only covers domestically produced goods and services, and the sectors include logging, mining and quarrying, manufacturing, utilities (electricity and water), transport and communication sector.

CPI, an official from the National Statistical Bureau (NSB) said, included price change for both domestically produced and imported goods.  It is basically the retail price at which end consumers purchase.

While there was a strong relation between PPI and CPI, he said, in Bhutan’s case, the relation was not very convincing.

PPI is normally the lead indicator of inflation, but since most of the goods and services are imported into the country, except for utilities like electricity, water supply and communications, it does not derive the overall inflation in the country.  But for other developed countries, it does.

Meanwhile, manufacturing sector recorded the highest increase in PPI; it contributed significantly to the overall increase.

Consumer prices for food went up by 4.94 percent and non-food by 7.15 percent.

Prices of local produced goods and services increased by 6.61 percent and imported goods increased by 6.05 percent over one year period (from January 2014 to January 2015).

By Tshering Dorji