Commodity prices have risen dramatically over the last few months as the measures taken to contain Covid-19 had a major impact on food supplies in the country.
The year-on-year consumer prices went up by 7.56 percent in July 2020 compared to the same month last year as food prices increased by 14.91 percent, reports the National Statistics Bureau (NSB) in its latest report.
The main contributors to the increase are meat import, the price of which increased by 38.04 percent. The prices of fish increased by 26.46 percent, vegetables by 20.86 percent, milk, cheese and eggs by 17.13 percent, and fruits by 16.68 percent.
The NSB is yet to release the consumer price index (CPI) report for August when the consumers reported high increases in prices of commodities including alcoholic drinks, vegetables and meat.
For instance, in July, the prices of local beef and pork were Nu 450 and Nu 500 per kg respectively. The prices for the same have now reached up to Nu 700 per kg.
This means that the prices of meat have increased by about 50 percent over the last one month.
A restaurant operator in Thimphu said that he had no choice but to increase the prices of food.
He said that a plate of a full meal would have been available at a cost of Nu 100 a few months ago. “We are forced to increase the price of our food items proportionately with meat and vegetable prices,” he said.
A restaurant operator in Changzamtog said that it was difficult to get meat from vendors. “Some keep meat in their shop but they say it has been reserved.”
Economic Affairs Minister Loknath Sharma said that the inflation was not too serious considering the impact of Covid-19 in the market. He said the price escalation was partly because of the cost of production, which according to him had increased.
“If the price rise is artificial then we are worried. This is not a normal situation and it will not improve immediately,” he said.
Chief programme officer of Office of Consumer Protection (OCP), Jigme Dorji, in an earlier interview said that fixing prices was almost impossible. But he added that the OCP would intervene if the vendors cheat taking advantage of the Covid-19 situation.
Non-food prices, however, recorded only 1.68 percent increase over the past year. Commodities within the non-food recorded an increase except for communication, which has dropped by 6.16 percent mainly due to drop in the data charges.
The month-on-month CPI recorded the highest increase so far at 3.27 percent over the previous month of June.
The overall month-on-month food price increase was 5.99 percent from June to July. The main contributors were a 36.25 percent increase for meat, 11.53 percent increase for fish and 8.73 percent increase for vegetables.
With the increase in commodity prices, the purchasing power of Ngultrum (PPN) as measured by CPI was Nu 67 as of July 2020 compared to December 2012. This means, Nu 100 in July 2020 was worth only Nu 67 at December 2012 prices.
The PPN has dropped by 7.03 percent in the past 12 months (from July 2019 to July 2020) due to price increase in the economy.
The CPI is a measure of average price changes in the basket of goods and services purchased by households over time. It shows how much, on average, prices of goods and services have increased or decreased from a particular reference period.
According to NSB, the CPI covers the goods and services consumed by the households and a sample of goods and services are selected using the household expenditure data to measure the inflation experienced by the households.
Prices of the sampled goods and services are collected from urban areas in 20 dzongkhags on monthly, quarterly and annual frequency depending on the price volatility of the items.