Thukten Zangpo 

The cost of consumer goods and services climbed to 3.83 percent in June this year compared to the same month last year after seeing a downward trend in the first three-month of this year.

It was up from May’s annual rate of 3.4 percent and the lowest was recorded at 3.12 percent in March this year. The inflation rate was lower than the Royal Monetary Authority’s upper threshold of 6 percent.

Inflation measured in consumer price index (CPI) is when the Ngultrum in Bhutanese wallet lose their purchasing power as prices for goods and services surge.

The purchasing power of Ngultrum as measured by CPI was Nu 58 as of June this year compared to December 2012. It means that Nu 100 in June this year is worth only Nu 58 at December 2012 prices, dropping by 3.69 percent.

According to the figures maintained by the National Statistics Bureau (NSB), the prices for both food and non-food increased by 4.72 percent and 3.08 percent respectively.

Except for transport and communications, the price for all other divisions saw a price increase.

Sector-wise, annual inflation was driven by food and non-alcoholic beverages, where prices have surged significantly by 4.85 percent. Food and beverages constitute 42.78 of the weight in the CPI basket.

Prices for alcoholic beverages and betel nut with a weight of 3.17 percent increased by 2.94 percent and prices for housing and utilities with 11.57 percent weight increased by 10.5 percent.

However, the prices for transport with 15.63 weightage saw a decrease of 5.01 percent mainly because of a fall in fuel prices and communication decreased by 0.95 percent.

Looking at month-on-month, the June month CPI this year saw a decrease of 0.01 percent compared to May this year.  This was because prices for food increased by 0.52 percent  prices while for non-food, it saw a decrease by 0.45 percent.

At the same time, the price of transport saw a decrease of 1.33 percent, alcoholic beverages and betel nuts decreased by 0.43 percent,and housing and utilities decreased by 0.28 percent.

Compared to 2022 and 2021 inflation, the prices of household goods and services increased by 5.64 percent in 2022. This was a drop of 1.71 percentage points compared to 7.35 percent in 2021.

According to the NSB, the lower rate was because of the lower rate of increase in food items by 3.95 percent last year compared to a 9.38 percent increase in 2021.

Last year, food prices contributed about 34 percent, and non-food at 66 percent of the total increase. In 2021, food prices were the main driver of the inflation contributing to almost 60 percent of the total increase.

Food and alcoholic beverage contributed to more than 33 percent of total inflation increase, transport to 33 percent, and clothing and footwear with about 13 percent of the increase in 2022.