Thukten Zangpo

Inflation eased for Bhutanese producers in the first quarter of this year (January, February and March), with producer price index (PPI) recording a 4.02 percent decrease compared to the same period last year. This indicates that local businesses experienced a decline in selling prices. 

According to the National Statistics Bureau’s PPI report, it was mainly because of the decrease in the prices in mining and quarrying, manufacturing, and information and communication sectors.

While PPI can be an indicator of future consumer inflation, Bhutan’s heavy reliance on imports means it may not significantly impact the consumer price index (CPI), except for utilities like electricity and communications.

PPI or the ex-factory price is the price at which producers sell goods to wholesale dealers and covers domestically-produced goods and services as well as export markets. 

CPI records the retail price and measures changes in the price level of consumer goods and services purchased by households. 

PPI consists of sectors such as logging, mining and quarrying, manufacturing, electricity, gas, steam, air conditioning supply, transport, and information and communication. 

The mining and quarrying sector saw an average decrease of 14.39 percent in the first quarter of this year because of lower prices of coal and other mineral products. The manufacturing sector recorded a decline by 8.14 percent in the first quarter on an average. This drop was attributed to various factors impacting production costs. 

The information and communication sector also saw an average decline of 9.75 percent because of reduced prices of postpaid and prepaid services from October to November last year. 

However, the transport sector recorded a price increase of 3.39 percent mainly because of higher public bus and taxi fares implemented in August last year, which contributed to the overall rise in inflation.  These fares were reduced in March this year by the Bhutan Construction and Transport Authority. 

There was no change in the price of electricity, gas, steam, air conditioning supply, and forestry and logging sectors in the first quarter of this year compared to the same period last year. 

Looking at the month-to-month inflation, there were decreases of 0.72 percent in January and 1.04 percent in March. However, February saw an increase of 0.27 percent.

This decline was attributed to price decreases in manufacturing, down by 1.68 percent, transport, down by 0.79 percent, and mining and quarrying sectors, down by 0.01 percent, with average declines of 0.98 percent. 

However, forestry and logging, electricity, gas, steam, and air conditioning supply, and information and communication sectors saw no change in prices during the first quarter of this year compared to the same period the previous year.