Inflation increase slowed by 0.43% in March

The PPN has dropped by 8.35% in the past 12 months due to price increase in the economy

The Consumer Price Index (CPI) for the month of March 2021 increased by 9.11% 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 prices of goods and services increase slowed by 0.43% point as compared to February which recorded 9.54%  increase.

The increase in March is due to increase in food prices which went up by 15.25%. The inflation rate is 0.43% points lesser than the rate recorded in previous month of February which was 9.54%.

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

Within the food group, prices of betel nut and betel leaves recorded the highest increase with 43.97% followed by meat price which went up by 36.56%, and fish and vegetables with 26.54% and 21.04% respectively.

However, non-food prices increased by 4.16%, up by 0.56 percentage point from February which is due to increase in transport and housing and utilities.

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 prices increased by 0.50% due to increase in alcoholic beverages and narcotics (betel nut and betel leaves) by 2.57%, followed by transport with 0.82% and housing and utilities by 0.56%.

According to the report, the purchasing power of Ngultrum as measured by the CPI is Nu 64 as of March 2021 compared to December 2012. This means that Nu 100 in January 2021 is worth only prices at Nu 64 in December 2012.

The PPN has dropped by 8.35% in the past 12 months (from March 2020 to March 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.

The inflation was mainly due to the increase in manufacturing sector by 6.33% in March. 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 4.59% on an average due to the increase in exchange rate and increase in the RSTA bus fare. The Information and Communication sector has decreased by 12.57%, while prices remained almost same for logging, electricity and gas, and water supply.

Kinley Yonten from Thimphu