Goods and services 8.69% costlier compared to last year

The Purchasing Power of Ngultrum (PPN) as measured by the CPI is Nu 64 as of May 2021 compared to December 2012

The country’s inflation rate, as measured by the Consumer Price Index (CPI), rose by 8.69% in May due to higher food prices when compared with a year ago.

However, the CPI decreased by 0.64% from April this year. The CPI rose by 8.69% in May to 113 when compared to 103.96 a year ago. 

Economic Affairs Minister Loknath Sharma said the rising inflation is the most hurting currently because of the disruption in the supply chain due to the COVID-19. 

“We are really concerned about the rising costs with rising fuel prices globally, and extra costs put in by the COVID protocols which are dearly between lives and livelihoods,” he said. 

Food prices continue to be the main driver of inflation at 12.70%. Within food, betel nuts and betel leaves recorded the highest increase with 40.75%, followed by meat and cooking oils with 37.21% and 20.21% respectively.  

Moreover, the prices of non-food went up by 5.40% in the past one year. Transport group (8.10%) and clothing and footwear (8.38%) were the main contributors to the increase in the non-food inflation. 

Increase in transport is mainly due to the price of petrol and diesel which went up by more than 60% on average. A litre of petrol cost Nu 77.02 and diesel Nu 73.46 as of yesterday. 

This was followed by housing and utilities at 6.85%, restaurants and hotels at 6.28%, health at 5.71%, furnishings, household equipment and routine household maintenance at 4.93%, recreation and culture at 2.65%, and education at 0.93%. 

However, the communication prices dropped further by 16.09% with the reduction in the call charges in May.

Month-on-month prices decreased by 0.64%(-0.64) from April to May with both food and non-food groups recording a decrease of 1.38% and 0.01% respectively. 

Drop in vegetable prices contributed to the decrease in food group, while for non-food, it is due to drop in communication price (call charges). 

The Purchasing Power of Ngultrum (PPN) as measured by the CPI is Nu 64 as of May 2021 compared to December 2012. 

This means that Nu 100 in May 2021 is worth Nu 64 during December 2012. The PPN has dropped by 8% in the past 12 months (from May 2020 to May 2021) due to price increase in the economy.

The CPI basket has a total of 113 items (314 varieties) classified according to Classification of Individual Consumption According to Purpose.

Thukten Zangpo from Thimphu