Goods and services 6.47% costlier compared to last year

The Purchasing Power of Ngultrum (PPN) as measured by the CPI is Nu 63 as of October 2021 compared to December 2012

The countryโ€™s inflation rate rose by 6.47% in October due to higher food prices when compared to the previous year, as per the Consumer Price Index (CPI),

The inflation rate increased after recording a drop in the last three months. The CPI decreased by 1.09% in July, 0.23% in August and 0.26% in September this year.

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 pandemic. 

โ€œWe are really concerned about the rising costs,โ€ he said, โ€œWith fuel prices increasing globally and the extra costs put in by the Covid-19 protocols, lives and livelihoods have been affected.โ€  

Meanwhile, food prices continue to be the main driver of inflation at 4.96%, with areca nut and betel leaves recording the highest increase at 10.67%. Prices of sugar, cooking oil and meat also saw significant increases.

Prices of non-food items went up by 7.77% in the last one year alone due to alcoholic beverages, clothing and footwear, housing and utilities, and transport accounting for about 85% of the total increase.

Further, transportation cost increased mainly due to the hike in diesel price by 51% and petrol by 39%. Price of LGP also shot up by 50.70% and kerosene by 58.20%, contributing to the increase in housing and utility costs by 7.05%.

Restaurants and hotel costs recorded an increase of 7.04%, while health expenses went up by 3.46%. Likewise, inflation in furnishings, household equipment and routine household maintenance stood at 6.81%, recreation and culture at 2.46% and education at 0.01%. 

However, due to the concession given on call charges in October, communication prices dropped by negative 4.30%.  

Month-on-month prices increased by 1.74% from September to October with both food and non-food groups recording an increase of 2.14% and 1.40% respectively. The rise in vegetable prices contributed to the increase in the food category.

Meanwhile, the Purchasing Power of Ngultrum (PPN) as measured by the CPI stands at Nu 63 as of October 2021 compared to December 2012. This means that Nu 100 in May 2021 is worth Nu 63 back in December 2012. The PPN has dropped by 6.08% in the past 12 months (from October 2020 to October 2021) due to the inflation 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 Thimphu