Inflation increased to 8.97% in January

The PPN has dropped by 8.24% in the past 12 months due to price increase in the economy

The Consumer Price Index (CPI) for the month of January 2021 increased by 8.97% compared to the same month the previous year, according to the CPI Bulletin for March 2021 released by the National Statistics Bureau (NSB) recently.

The inflation rate is 1.25% points higher than the rate recorded in previous month of December which was 7.72%.

The increase is mainly associated with the increase in food prices at 8.97% and the rate of increase for non-food prices, which went up by 0.8% from December and up by 2.67% compared to January of last year.

According to the report, the price of vegetables, meat, dairy products and alcoholic beverages contributes majorly to the rise.

This means that the prices of local goods and services increased in January month. This was mainly due to increase in food prices and also non-food raise up.

Meanwhile, 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 NSB’s report also shows that the month-on-month CPI increased by 1.46% from December due to increase in price of vegetables, fruits and alcoholic beverages. The prices of food, alcoholic beverages, clothing and footwear increased by 2.24%, 8.41% and 1.43% respectively.

According to the report, the purchasing power of Ngultrum as measured by the CPI is Nu. 65 as of January 2021 compared to December 2012. This means that Nu 100 in January 2021 is worth only prices at Nu 65 in December 2012.

The PPN has dropped by 8.24% in the past 12 months (from January 2020 to January 2021) due to price increase in the economy.

Likewise, the Year-on-Year (YoY) inflation rate (as measured by PPI) for April, May and June as compared to the same months of the previous year is recorded at 1.58%, 1.80% and 1.59% respectively.

On average this is an increase of 1.66% from the second quarter of the previous year (2019).

The inflation was mainly due to increase in manufacturing sector by 3.72%, 4.24% and 3.76% in April, May and June respectively. Within the manufacturing sector, the increase in price of basic metals was the main contributor which led to the overall increase.

Prices in transport sector increased by 2.93% on an average due to the increase in exchange rate and increase in the RSTA bus fare.

The Mining/Quarrying sector recorded a consistent increase of 0.54% in all three months. The Information & Communication sector has decreased by 8.26% on an average, while prices remained same for logging, electricity and gas, and water supply.

Further, the month-to-month prices decreased in April by 0.59%; increased in May by 0.18% and again went down by 0.98% in June. On an average, it decreased by 0.46% in second quarter due to decrease in price of manufacturing sector by 0.72%.