In a recent report released by the National Statistics Bureau (NSB) in January 2025, the Consumer Price Index (CPI) for December 2024 revealed an increase in inflation to 2.02% year-on-year, up from 1.87% in November 2024. This uptick reflects a growing national average inflation rate of 2.82% for the entire year, primarily influenced by a significant rise in food prices.
According to data from the bureau, the food inflation rate surged to 4.47% in December 2024, with the Food and Non-Alcoholic Beverages index witnessing a notable increase of 5.05%. Conversely, the Alcoholic Beverages and Betel Nuts index experienced a decline, falling by 2.41%.
In a contrasting trend, non-food inflation declined to -0.6% during the same period. This decrease was largely attributed to a drop in the Housing and Utilities index, which fell by 0.85%, and a substantial decrease in the Transport index, which plummeted by 5.43%.
Eastern and Western Region Inflation
Similarly, inflation rates soared in the eastern and western regions of the country, recording noticeable increases.
According to the latest data from NSB, the Eastern region’s month-on-month headline inflation rate surged to 0.41% in December 2024, primarily driven by increases in both the Food and Non-food indexes. The food inflation rate in the Eastern region also saw a notable increase, rising to 0.74%, with the Food and Non-Alcoholic Beverages index increasing to 0.79% and the Alcoholic Beverages and Betel Nuts index rising to 0.08%.
The Western region’s month-on-month headline inflation rate shot up to 1.34%, fueled by increases in both the Food and Non-food indexes. The food inflation rate in the Western region reached 2.59%, with the Food and Non-Alcoholic Beverages index soaring to 2.76% and the Alcoholic Beverages and Betel Nuts index rising to 0.43%.
The Transport index emerged as a major driver of inflation in both regions, with the Eastern region witnessing a 0.12% increase and the Western region seeing a 0.13% rise. The Western region’s non-food inflation rate, on the other hand, recorded a minuscule increase of 0.03%.
The sharp increase in inflation rates in both regions has raised concerns about the impact on household budgets and the overall economy. Policymakers will need to carefully analyze these trends and take necessary steps to mitigate their effects and ensure a stable economic environment.
Capital City and Central Region Inflation
Similarly, in December 2024, a significant increase in inflation rates was recorded across the Capital City and the Central region.
According to the NSB, the month-on-month inflation for the Capital City jumped to 0.12%, while the Central region experienced a substantial 0.52% increase in inflation.
The Food index led the pack with a notable 0.21% rise in December 2024, marking a substantial increase in prices of essential commodities. A breakdown of the Food category revealed a 0.10% increase in the Food and Non-Alcoholic Beverages index, while the Alcoholic Beverages and Betel Nuts index saw a whopping 1.82% increase.
Non-food prices also rose, albeit at a slower pace, with a 0.03% increase driven by a 0.15% hike in the index of Transport. This marked a significant increase in the cost of transportation, contributing to higher inflation rates in the Non-food sector.
In contrast, the Central region’s CPI saw a substantial 0.52% increase. Data from the bureau revealed a significant rise in the Food index, with a 1.03% increase largely driven by a 1.12% rise in the Food and Non-Alcoholic Beverages index.
Meanwhile, an economic expert noted that the sharp increase in inflation rates in the Capital City and Central region raises concerns about the overall economic performance. “With prices rising across major categories, consumers can expect higher costs for essential goods and services. This, in turn, may impact purchasing power and overall economic growth,” said the expert.
In addition, the expert stated that as inflation increases, policymakers will need to take a closer look at monetary and fiscal policies to mitigate the impact of rising prices and ensure stability in the economy.
Sherab Dorji from Thimphu
