Consumer prices decrease in August compared to August 2020

The year-on-year CPI in August last year stood at 7.44% and 5.30% in August this year

Consumer prices in August this year have slightly decreased as compared to August last year.

According to the Consumer Price Index (CPI) published recently by the National Statistics Bureau (NSB), the year-on-year percentage change of the consumer prices has decreased over the period from August last year to this year August, which was the lowest rate over the year.

Year-on-year percent change measures the average price change between the specific month with that of the same month of the previous year.

The year-on-year CPI in August last year stood at 7.44% and 5.30% in August this year. However, in February this year the percentage change has increased to 9.54%, which was highest within the year. 

The prices of food items increased by 4.25%, and for non-food items, prices increased by 6.19% in August compared with that of August last year.

As compared to March this year the price increased in August for food items was the lowest. In March the price increased to 15.25%. 

However, for non-food items the price has increased in August as compared to March this year. In March the price stood at 4.16%.   

According to the NSB, the main contributors for inflation was food, and non-alcoholic beverages prices stood at 3.55%, contributed by an increase in price of oils and fats by 20.63%, cereals  and bread by 7.04%  and meat by 6.60%.

Similarly, transport prices stood at 8.72%, mainly due to increase in fuel prices of petrol and diesel by around 20%.

The highest increase was on alcoholic beverages and betel nuts by 14.19% due to the increase in betel nuts by 21.09%.

Meanwhile, the communication prices dropped by 10.92% in the past one year due to reduction in call and data charges.

An economist and also the managing director of the Ugyen Trading group, Dr Damber S Kharka said that whenever there is an increase in inflation, a certain level of inflation is desirable because if the price goes down, nobody would like to produce.

But he said when there is a high inflation, it will affect consumers’ pocket.

“So, inflation if it is a freak and going on fast, then it will really lower down the living standard of the people. It will bring down your real income, real economy,” he said.

The purchasing power of the Ngultrum as measured by the CPI is Nu 64 as of August 2021 compared to December 2012. This means that Nu 100 in August 2021 is worth only Nu 64 at December 2012 prices. The PPN has dropped by 5.03% in the past 12 months from August 2020 to August 2021 due to price increase in the economy.

The CPI covers the goods and services consumed by households and a sample of goods and services are selected using the household expenditure data to measure the inflation experienced by the households. Prices of the sampled goods and services are collected from urban areas in 20 Dzongkhags on monthly, quarterly and annual frequency depending on the price volatility of the items.

Dechen Dolkar from Thimphu