Bhutan Records Lowest Inflation Rate In 2018 At 3.13 Percent

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For the measurement of the current Consumer Price Index, prices are collected from a sample of 557 outlets.

At the Thimphu Weekend Food Market. (Source: Helsand Christian)

 

By Tshering Palden | Kuensel

Bhutan recorded the lowest inflation rate since the National Statistics Bureau (NSB) began its tracking 15 years ago.

The Consumer Price Index (CPI) or the inflation rate from December 2017 to December 2018, increased by 3.13 percent, up by 0.04 percentage point.

Further statistical breakdown of the Consumer Price Index

The increase in rate is mainly due to increase in food prices by 3.87 percent while non-food prices dropped by 0.11 percentage point to 2.65 percent as compared to 2.76 percent in November.

Local goods and services recorded higher increase with 3.24 percent compared to imported goods and services which increased by 3.03 percent.

Food prices (for both local and imported) recorded higher increase compared to the non-food group which increased by 2.65 percent.

However, local food prices increased by 4.26 percent as compared to 3.55 percent for imported food prices.

The CPI for December 2018 over the previous month of November went up by 0.39 percent which is 0.13 percentage point higher.

The increase is mostly fueled by food prices which rose 1.38 percent while prices dropped by 0.26 percent for non-food items, triggered by the decrease in prices of fuel.

Local goods and services increased by 0.75 percent while imported goods went up by 0.05 percent.

The NSB quoted the increase in prices of vegetables for the increasing CPI for local goods while the drop in fuel prices within this month has held the increase for imported goods to 0.05 percent although food prices recorded 0.89 percent increase.

The purchasing power of ngultrum (PPN), as measured by the CPI, had dropped from Nu 75 in January to Nu 73 in December. This means, Ngultrum 100 in December 2018 is worth only Ngultrum 73 at December 2012 prices, which was the reference period.

 

Inflation rate from Jan-Dec 2018

Photo: Kuensel

 

The PPN has decreased by 3.04 percent in the past 12 months due to price increase in the economy.

How is the Consumer Price Index derived?

The CPI shows how much, on average, the prices of goods and services have increased or decreased from a particular reference period, commonly known as the base period, which in this case is 2012.

The index considers 151 items (436 varieties) or sample of goods and services representative of all goods and services purchased by typical households in Bhutan.

Sample outlets are permanent establishments or retail shops from which the monthly price of goods and services are collected or quoted. These include groceries, clothing and footwear, restaurants, hardware shops, vegetable vendors and service providers etc.

The CPI is one of the major indicators that determine the effectiveness of an economic policy.

For the measurement of the current CPI, prices are collected from a sample of 557 outlets. It is used to formulate fiscal and monetary policies and monitor their effect on the overall economy.

 

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

 


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