Bhutan's inflation falls to 1.84 percent, easing cost-of-living pressure

THIMPHU – According to the National Statistics Office (NSB), the cost of goods and services fell to 1.84 percent in June this year compared to the same month last year.

This was 1.99 percentage points below the inflation rate of 3.83 percent in June last year.

This is mainly due to falling prices in the areas of communications, housing and utilities, leisure, transport and education, the NSB explained.

A rise in the prices of goods and services has reduced the purchasing power of the Ngultrum by 1.81 percent. The purchasing power of the Ngultrum at Nu 100 in June this year is equivalent to Nu 57.4 in December 2012 prices.

Inflation is measured by the Consumer Price Index (CPI). It measures the average change in the prices of consumer goods and services over time. It helps measure inflation by indicating whether prices have fallen or risen from a specific reference period, the base year.

In the first six months of this year (January to June), the consumer price index was 3.78 percent.

According to a press release from the NSB, food inflation fell from 4.72 percent in June last year to 2.39 percent in June this year.

Among food items, food and non-alcoholic beverages were the main drivers of inflation, falling by 2.74 percentage points from 4.85 percent in June last year, while inflation in the non-food sector fell from 3.08 percent to 2.06 percent over the same period.

The reason for this was falling prices for communication (-2.7 percent) and for housing and utilities (-0.5 percent). The costs for leisure and culture amounted to 0.16 percent, for education 0.68 percent, for transport 1.05 percent and for furniture and household appliances 1.91 percent.

Comparing the average annual inflation rate, inflation declined to 4.23 percent in 2023, compared to 5.64 percent in 2022. This was mainly due to a slower annual increase in non-food items, which was 4.44 percent, compared to 7.1 percent in 2022.

The NSB also released a revised CPI report for June with four additional CPI rates – for the western, central and eastern regions of Thimphu (capital).

In Thimphu, inflation fell to 0.09 percent in June from the previous month, mainly due to the decline in non-food prices since May this year.

The housing and utilities index recorded a decline to 1.01 percent and the transportation sector to 0.03 percent. However, the food and non-alcoholic beverages sector recorded a marginal increase of 0.01 percent.

In the central region, which includes Bumthang, Dagana, Sarpang, Zhemgang, Trongsa and Tsirang, inflation fell to 0.63 percent, indicating a moderation in the cost of living, according to the NSB.

The non-food price index declined to 0.47 percent, due to the decline in fuel and utility prices in the transportation and housing and utilities categories, which fell by 2.58 percent and 1.72 percent, respectively. The food index also recorded a marginal decline of 0.17 percent.

In the Western Region, which includes Gasa, Punakha, Thimphu, Wangdue, Haa, Paro, Samtse and Chhukha Dzongkhags, inflation was recorded at 0.28 percent.

This was mainly due to declines in the transport sector by -3.42 percent and in the housing and utilities sector by -1.07 percent. In the food and non-alcoholic beverages sector, however, declines increased by 0.49 percent.

Inflation of 0.01 percent was recorded in the eastern regions of Mongar, Tashigang, Trashigyangtse, Lhuntse, Pemagatshel and Samdrupjongkhar.

Food prices rose by 0.45 percent, while non-food prices fell by 0.45 percent. Transport and housing and utilities recorded a decline of -3.10 percent and -1.21 percent, respectively.

The overall decline in inflation was mainly due to falling transport, housing and utility prices, largely due to lower fuel prices.

To calculate inflation, 169 posts at the national level were used: 120 posts in the east, 165 posts in the west, 144 posts in the centre and 134 posts in the capital Thimphu.