Goods and services 8.69% costlier compared to last year

Goods and services 6.03% costlier compared to last year

The Purchasing Power of the Ngultrum as measured by the CPI has dropped by 5.69% in the last one year (from January 2021 to January 2022)

The prices of consumer goods and services rose by 6.03% in January due to higher food prices when compared to the previous year, as per the Consumer Price Index (CPI) report of the National Statistics Bureau. 

Non-food prices recorded a higher increase with 6.68% compared to food prices which increased by 5.27% for the same period. Non-food contributed to 57% of the overall increase as compared to 43% of the total contribution by food.

According to the report, among the 12 divisions of food and services, the highest contribution was from food and non-alcoholic beverages with a 5.43% increase, contributing to 41% of the overall inflation rate. It was followed by transport with an 8.65% increase, contributing to 21% of the total increase.

Clothing and footwear, though recorded the highest increase in January with 10.45%, contributed to 15% of the overall increase.

Month-on-month inflation rate (December to January) increased by 0.66% with both food and non-food prices increasing over the previous month. Except for communication and education, all other divisions recorded an increase in the past one month.

 In addition, the prices of household goods and services increased by 7.35% from 2020 to 2021. This was an increase of 1.72 percentage point compared to 5.63% increase in 2020.

However, the higher rate in 2021 was due to an increase in non-food by 5.62% compared to 1.24% increase in 2020.

Food prices contributed to about 60% of the overall inflation rate in 2021 and non-food contributed to 40% of the total increase.

Meanwhile, food prices were the main driver of inflation rate, contributing to almost 90% of the total increase last year.

Among the 12 major divisions of food and services, food and alcoholic beverages contributed to more than 50% of the total increase in 2021, followed by transport with about 15% and clothing and footwear with about 11% contribution to the total increase.

Alcoholic beverages and betel nuts recorded the highest increase with 16.66% while education fees recorded the lowest increase with 0.66% last year. All other divisions recorded an increase except for communication which dropped by 9.90%.

According to Economic Affairs Minister Loknath Sharma, the rising inflation has made the situation critical due to the disruption in the supply chain caused by the Covid-19 pandemic. 

“We are really concerned about the rising costs,” he said. “With fuel prices increasing globally and the extra costs put in by the Covid-19 protocols, lives and livelihoods have been affected.”  

Meanwhile, the Purchasing Power of the Ngultrum (PPN) as measured by the CPI is Nu 61 as of January 2022 compared to December 2012. This means that Nu 100 in January 2022 is worth only Nu 61 at December 2012 prices.

The PPN as measured by the CPI has dropped by 5.69% in the last one year (from January 2021 to January 2022) due to price increase in the economy.

The CPI basket has a total of 113 items of 314 varieties, classified according to the Classification of Individual Consumption. A total of 450 outlets were selected for pricing. 

Kinley Yonten from Thmphu