Inflation jumped to 5.07% in October 2023

The inflation rate increased to 5.07% in October 2023 and is mainly attributed to an increase in the price of both food and non-food items, which increased by 5.25% and 4.91% respectively.

Further, except for the decrease in the prices of transportation, there has been an increase in the price of almost all items in the said month. This also means that the purchasing power of Ngultrum as measured by CPI is Nu 57 as of  October 2023 compared to December 2012, meaning, Nu 100 in October 2023  was worth only Nu 57 at December 2012 prices.

The Purchasing Power of Ngultrum as measured by CPI has also dropped by 4.82% last year, which is from October 2022 to October 2023. The decrease is mainly attributed to price increases in the economy.

The inflation rate is calculated based on the twelve major divisions, which include food and non-alcoholic beverages, alcoholic beverages, tobacco, and narcotics, followed by clothing and footwear, and also includes housing, water, electricity, gas, and other fuels, amongst others.

The division also includes furnishings, household equipment, and routine household maintenance, followed by health, transport, communication, recreation and culture, education, restaurants and hotels, miscellaneous goods and services, and others.

According to the report on the Consumer Price Index (CPI): October 2023 released by the National Statistics Bureau (NSB), except for communication, the prices for all other divisions have increased. The prices for communication have decreased by 2.86%, however, the prices of food and non-alcoholic beverages have increased by 5.19%, followed by the price of alcoholic beverages and betel nuts increased by 6.04%.

Similarly, the price of health has increased by 13.47%, followed by an increase in housing and utilities by 9.58%. The price of clothing and footwear has also increased by 7.03%.

According to the report, the month-on-month CPI in October 2023 increased by 0.67% from September 2023, an increase in this month is attributed with an increase in both food and non-food prices by 0.04% and 1.20% respectively.

As compared to the previous month, the price of transport in the month of October 2023 had increased by 2.84%. Similarly, furnishings, household equipment, and routine household maintenance have also increased by 2.19%.

Meanwhile, the price of food and non-alcoholic beverages has decreased by 0.03%t, communication has also decreased by 2.9%, followed by restaurants and hotels, which have also decreased by 0.29%, as of October 2023.

The prices of household goods and services increased by 5.64% from 2021 to 2022, a drop of 1.71% point compared to 7.35% in 2021. The lower rate in 2022 was attributed to the lower rate of increase in the food items by 3.95% compared to a 9.38% increase in 2021.

Food prices contributed about 34% of the overall inflation rate in 2022 and non-food contributed to 66 percent of the total increase. In 2021, food prices were the main driver of the inflation rate contributing to almost 60% of the total increase, according to the report.

Amongst the twelve major divisions, food and alcoholic beverages contributed to more than 33% of the total increase in 2022, followed by transport with about 33%, while clothing and footwear with about 13% contribution to the total increase.

For instance, in 2022, among the twelve major groups, transport recorded the highest increase with 12.59% while alcoholic beverages and betel nuts recorded the lowest increase with 1.16%.  All other divisions recorded an increase except for communication which dropped by 1.46 percent in 2022.

Meanwhile, the CPI is a measure of average price changes in the basket of goods and services purchased by households over time.  It shows how much, on average, prices of goods and services have increased or decreased from a particular reference period, commonly known as the Index reference.

Sherab Dorji from Thimphu