Consumer spending jumped 2.3 percent last year and continued to absorb high prices on groceries, fuel, and other basic needs.
Spending rose as annual inflation hit an all-time high of 7.35 percent last year. Inflation was reported at 5.63 percent and 2.73 percent respectively in 2020 and 2019.
The prices of household goods and services increased by 7.35 percent last year from the previous year. Food prices accounted for about 60 percent of the overall inflation and 40 percent of non-food.
Inflation as of June this year was 6.54 percent, higher than the Royal Monetary Authority’s upper threshold of 6 percent.
Last year’s consumer spending, measured in the private final consumption expenditure adjusted for inflation, was recorded at Nu 32.5 billion (B), an increase of Nu 725 million (M) from 2020, the National Accounts Statistics 2022 showed.
However, the spending was below the pre-pandemic level of Nu 33.85B in 2019.
Private household final consumption expenditures are the household purchases of products for their everyday needs, like food, clothing, cars, rent, and personal services.
Household spending on food and alcoholic beverages, which accounts for 37 percent of household spending rose by 1 percent to Nu 9B in 2021, with alcoholic beverages, tobacco, and narcotics spending shrinking about 6 percent to Nu 739.5M.
However, Nu 12.2B was spent on food and alcoholic beverages in 2019, and Nu 737.8M on alcoholic beverages, tobacco, and narcotics.
The price of alcohol beverages, tobacco, and narcotics saw the highest increase with 16.66 percent last year.
Spending on clothing and footwear declined by about 4 percent to Nu 2.5B in 2021 from the previous year. Clothing and footwear reported 11 percent inflation increase.
Housing, water, electricity, gas, and other fuel costs advanced by about 20 percent and 28 percent from 2020 and 2019 respectively at Nu 5.3B last year.
Spending on transport costs increased by 1 percent at Nu 3.2B, and those on leisure and culture and eatery and lodging services went up slightly. Transport costs saw an increase of about 15 percent.
That increase came when the petrol and diesel prices rose from Nu 59.73 and Nu 57.01 to Nu 72 and Nu 67.3 respectively in December last year from December 2020.
Bhutanese have spent more to buy the same amount of goods because the purchasing power of Ngultrum was Nu 62 as of December last year compared to Nu 100 in December 2012. This means that Nu 100 in December last year is worth only Nu 62 at December 2021 prices.
“The purchasing power of Ngultrum as measured by consumer price index has dropped by 6.43 percent in the last one year because of price increase in the economy,” according to the National Statistics Bureau.
The year also saw an increase in the gross domestic product per capita by Nu 18,279 from the previous year, which was estimated at Nu 284,33.