Bhutan’s inflation rises to 3.52% in March 2025 amid higher food prices
Bhutan’s inflation rate rose sharply to 3.52% year-on-year in March 2025, marking a continued upward trend that reflects growing cost pressures across the economy—chiefly led by soaring food prices, according to the latest Consumer Price Index (CPI) bulletin released by the National Statistics Bureau (NSB).
The report signals a notable intensification of inflationary momentum, especially within the food and beverage sector, which continues to impact household budgets and consumer behavior across the country. While most sectors recorded modest price increases, transportation and communication costs declined, offering a narrow but meaningful cushion against otherwise broad-based inflation.
Food Prices Remain the Main Driver
Food prices remained the dominant force behind March’s inflation surge, with year-on-year food inflation climbing to 5.81%. The Food and Non-Alcoholic Beverages index jumped by 6.43%, underscoring the persistent vulnerability of Bhutan’s economy to food supply shocks and import dependencies. Conversely, the Alcoholic Beverages and Betel Nuts index saw a decline of 1.65%, slightly easing the overall food inflation figure.
Non-food items registered a modest year-on-year increase of 1.01%, suggesting relatively stable price movements in sectors outside of food. However, this stability was largely influenced by a significant 4.24% decline in the Transport index, alongside a slight 0.13% drop in Housing and Utilities, which helped temper the overall inflationary pressures.
Monthly Trends Reinforce Upward Trajectory
Month-on-month, the overall CPI rose by 0.29% from February to March 2025. Food inflation increased by 0.55%, led again by the 0.60% rise in the Food and Non-Alcoholic Beverages index. The Alcoholic Beverages and Betel Nuts index held steady, showing no month-on-month change.
In contrast, non-food inflation declined by 0.13% month-on-month, driven by a notable 0.66% drop in transport costs—a trend consistent across multiple regions, likely influenced by recent adjustments in global oil prices or domestic transportation subsidies.
Regional Highlights: Inflation Felt Differently Across the Nation
Thimphu Region recorded the most pronounced month-on-month inflation, rising by 1.64%, largely driven by a 3.61% surge in food prices. The Food and Non-Alcoholic Beverages category alone increased by 3.86%, while non-food prices dipped slightly by 0.14%, pulled down by a 0.63% decrease in the Transport index.
Central Region saw a more moderate CPI rise of 0.27%. Food inflation rose by 0.70%, while non-food inflation declined by 0.14%, again influenced by a 0.73% drop in transport costs.
Eastern Region posted a minimal increase of 0.04%, with a small 0.20% rise in food and non-alcoholic beverages offset by a 0.63% drop in transport, keeping non-food inflation subdued at -0.14%.
Western Region experienced a 0.29% increase in CPI, as food prices rose by 0.69% and non-food inflation fell by 0.13%, led by a 0.36% decline in transport.
Outlook: A Balancing Act Between Food and Fuel
With food prices continuing to drive overall inflation and transportation costs offering only a temporary reprieve, Bhutan’s inflationary path in the coming months will hinge on external supply chain stability, fuel price volatility, and agricultural output during the monsoon and harvest seasons.
The NSB is expected to maintain heightened surveillance of key inflation indicators as policymakers weigh the broader economic implications, particularly for low-income households most vulnerable to food price shocks. The inflation trend also adds complexity to ongoing economic recovery strategies post-pandemic, especially in light of Bhutan’s efforts to boost domestic production and reduce import reliance.
As inflation continues to inch upward, the data from March 2025 serves as both a warning and a guide—highlighting the sectors in need of support and the importance of targeted interventions to ensure economic stability and consumer protection across all regions of the country.
Sherab Dorji from Thimphu
