Inflation slows in August

MB Subba

In what could be read as a positive sign, the inflation rate decreased in August after a record high commodity prices in July that were sent ratcheting up by the Covid-19-induced disruptions in food supplies.

According to the latest National Statistics Bureau (NSB) report, the year-on-year consumer price index (CPI) in August increased by 7.44 percent compared to same month of the previous year.

The rate of increase dropped by 0.12 percentage point in August compared to the rate in July, which was 7.56 percent.

Food and non-alcoholic beverages continue to be the main driver of the increase at 15.04 percent, followed by 9.82 percent increase for alcoholic beverages and areca nut.

Within food, prices of vegetables, fruits, meats and dairy products recorded the highest increase with an average increase of 22 percent.

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, commonly known as the index reference.

The month-on-month CPI, however, recorded a minimal increase of 0.09 percent over the previous month after a record increase of 3.27 percent in July. The increase was due to alcoholic beverages and areca nut, which increased by 1.69 percent over the previous month.

Prices of non-food groups went up by 0.06 percent, which was associated with the increase in fuel prices while the prices of other groups remained same.

The purchasing power of Ngultrum (PPN) as measured by CPI is Nu 67 as of August compared to December 2012. This means, Nu 100 in August 2020 is worth 67 in December 2012.

The PPN has dropped by 6.93 percent in the past 12 months, from August 2019 to August 2020, due to price increase in the economy.

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.

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