Bhutan Records An All Time Low Inflation Rate Of 2.98% In March 2019


The year-on-year inflation for the first three months this year is even lower than the average annual inflation last year.

At a local shop in Haa Valley, Bhutan. (Source: Youtube/Mark Wiens)


By Tshering Dorji Kuensel

The consumer price index (CPI) or year-on-year inflation in March 2019, which is the period between March last year and March this year, was recorded at 2.98 percent. It is down by 0.03 percentage point compared to February 2019.

This means that the prices of goods and services have increased by 2.98 percent in March this year compared to the same month last year.

The year-on-year inflation for the first three months this year is even lower than the average annual inflation last year, at 3.13 percent, which is an all - time low figure.

The year-on-year inflation in January was recorded at 3.12 percent and 3.01 percent the following month.

Graphic: Kuensel 

According to figures from the National Statistical Bureau (NSB), between March 2018 and March 2019, the prices of local goods and services increased by 3.44 percent while imported goods and services recorded an increase of 2.55 percent.

Statistical breakdown of inflation

The NSB has identified a sample of goods and services representative of all goods and services purchased by Bhutanese households called the ‘market basket’. It contains 151 items of 436 varieties.  The bureau has further classified these items into 12 major groups.

Within this group, transport recorded an increase in price at 5.14 percent between March last year and this year. This can be attributed to an increase in the price of vehicles.

In the non-food group, catering services experienced a price rise of 6.65 percent, followed by telephone and telefax equipment at 5.17 percent.

Within the food group, the price of fish increased by 7.20 percent within a 12-month period, followed by meat at 4.71 percent.

Since inflation erodes the purchasing power of ngultrum (PPN), as of March this year, Nu 100 is worth only Nu 73 as compared to December 2012.

When the prices of goods and services increase, the purchasing power of ngultrum drops, this is what economists define as inflation.

Bhutan’s inflation rate since 2011

From 8.8 percent in 2011, inflation hit an all-time high of 11 percent in 2012. After a persistent figure of about 8 percent for two successive years, it dropped to 4.58 percent in 2015. This happened on the back of rupee shortage, which was followed by credit and import restrictions.

However, economists say that a lower inflation does not translate into a decrease in the price of commodities. It simply means the prices of goods and services are increasing at a slower rate than before.

Food, commodities, transportation including fuel prices, housing and electricity are given more weightage for the sake of determining inflation.

It reflects the relative importance or contribution to the total consumption expenditure of all Bhutanese households. It is determined using the spending patterns of households based on the living standard survey. The more current the weightage, the more reflective they are of current consumer spending patterns.

Price inelastic goods, like fuel and rice are attached more weights because despite the change in price of such goods and services, the demand and the supply is unlikely to be affected.


This article first appeared in Kuensel and has been edited for Daily Bhutan.





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