Both food and non-food dropped by 1.50% and 7.01% respectively compared to October, last year
The Consumer Price Index (CPI) for the month of December 2022 had increased by4.44% compared to the same month last year, according to the CPI bulletin for December 2022 released by the National Statistical Bureau (NSB) recently.
According to the Bureau, there was a drop for both food and non-food items with 1.50% and 7.01% respectively compared to October, 2022.
Leading to the drop was transport acting as the main driver with 13.16% increase, contributing to 44% of the overall inflation followed by food and non-alcoholic beverages and clothing and footwear recording 1.45% and 7.28% increase,contributing to 15% of the overall inflation.
Similarly, month-on-month CPI in December 2022, is 0.05%, which is a decline from November while the food prices increased by 0.55% and the non-food prices went down by 0.38% in December. The decline, according to NSB is mainly driven by the decrease in the price of transport by 1.33%. Except for transport, the prices of the other eleven major divisions have increased.
While the prices of household goods and services have increased by 5.64% from 2021 to 2022; this is a drop of 1.71% point compared to 7.35% increase in 2021. The lower rate in 2022 was due to the lower rate of increase in the food items by 3.95% compared to 9.38% increase in 2021.
Meanwhile, food prices contributed to about 34% of the overall inflation rate in 2022, with non-food contributing to about 66% of the total increase. In 2021, according to the NSB, food prices were the main drivers of the inflation rate contributing to almost 60% of the total increase.
For instance, among the 12 major divisions, food and alcoholic beverages contributed to more than 33% of the total increase in 2022, followed by transport with about 33% and clothing and footwear with about 13% contribution to the total increase.
In 2022, among the twelve major groups, transport recorded the highest increase with 12.59%, followed by alcoholic beverages and betel nut which recorded the lowest increase with 1.16% while all other divisions recorded an increase except for communication which dropped by 1.46%.
Meanwhile, the Royal Monetary Authority (RMA), in its Annual Report 2022, states that with about 80% of Bhutan’s imports from India, the domestic inflation closely tracks inflation in India.
“Any fluctuation in Indian inflation has a direct impact on the Bhutanese consumption baskets. As a result, the inflation targeting monetary policy at 4 +/- 2percent range of Reserve Bank of India will, to some degree, cushion and ensures price stability in Bhutan,” the RMA has stated.
According to the RMA, in June 2022, the drivers of CPI inflation showed notable changes compared to June 2021.
“The major components of CPI during the review period include transport, food and non-alcoholic beverages. Inflation in food & non-alcoholic beverages remained the primary drivers of inflation although its contribution in absolute terms declined to 1.8% in 2022 from 3.7% in the previous year,” the report states.
Similarly, the report mentions that transport scaled a new peak and reached as high as 14.7% in the current inflation series in June 2022 due to the sharp rise in prices of petrol and diesel, a contribution towards inflation increasing to 23.9% from 10.5% in June 2021.
RMA has also stated that among the major drivers of food inflation, vegetables prices by 19.75% in CPI food witnessed a negative average growth at 2.8% due to increase in domestic production in the wake of the pandemic, which exerted downward pressure on food inflation.
In the meantime, oil and fats, which constitutes 5.2% of food inflation, saw slower growth at 13.6% in June 2022 compared to 21.6% in the June 2021, resulting from restoration of supply chain.
Similarly, non-food remained the main driver of inflation which grew at a monthly average of 7.2% in June 2022.
The increase in non-food inflation was mainly due to volatility of global crude oil prices, which rose sharply during the period as a result of limited supply chain and geopolitical tension in the region, according to RMA. And in June 2022, non-food inflation particularly transport, which constitutes 15.6% of weight, contributed more than 50% to non-food inflationary pressure compared to 40% in June 2021.
Meanwhile, the core inflation sustained a small change during the Fiscal Year (FY) 2021-22 to 4.8% from 4.6% in the FY 2020-21. The rise in price of housing led to marginal increase in core inflation, according to RMA.
Sherab Dorji from Thimphu
