Inflation increased to 6.87% in December 2021

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The Consumer Price Index (CPI) for the month of December 2021 increased by 6.87% compared to the same month the previous year, according to the CPI Bulletin for December 2021 released by the National Statistics Bureau (NSB) recently.

The inflation rate is 0.19% points higher than the rate recorded in the previous month of November, which was 7.26%. The increase is mainly associated with the increase in food prices by 1.30%.

However, within food, prices of chili and egg were the main contributors to the monthly increase.

Food prices went up by 6.92%, while non-food prices recorded a 6.82% increase, which was 1.20 percentage points lower than November month.

Both food and non-food contributed almost equally to the overall inflation, unlike the previous months where non-food contributed more.

According to the report, the drop in the overall rate was due to a drop in fuel prices in December month by about 10% on average.

Non-food price has decreased by 0.74% from November due to a drop in the fuel prices including petrol, diesel, and kerosene.

In addition, clothing and footwear recorded the highest increase in December with 10.77%, followed by alcoholic beverages and betel nuts, and miscellaneous goods and services with 10.44% and 9.26% respectively.

And the prices of household goods and services increased by 7.35% from 2020 to 2021.

Meanwhile, this was an increase of 1.72 percentage points compared to a 5.63% increase in 2020. The higher rate in 2021 was due to an increase in non-food price by 5.62% compared to a 1.24% increase in 2020.

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

In 2020, food prices were the main driver of the inflation rate contributing to almost 90% of the total increase.

Among the 12 major divisions, 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.

Further, alcoholic beverages and betel nuts recorded the highest increase with 16.66%, while education fees recorded the lowest increase with 0.66% in 2021.

However, all other divisions recorded an increase except for communication, which dropped by 9.90%.

According to the report, the purchasing power of Ngultrum as measured by the CPI is Nu 62 as of December 2021 compared to December 2012.

This means that Nu 100 in December 2021 is worth only Nu 62 at December 2012 prices. The Purchasing Power of Ngultrum as measured by the CPI has dropped by 6.43% in the last one year from December 2020 to December 2021 due to the price increase in the economy.

Kinley Yonten from Thimphu