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2018 records lowest inflation at 3.13 percent

With an annual average of 2.69 percent last year, Bhutan recorded the lowest inflation since the National Statistics Bureau (NSB) began tracking it 15 years ago.

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

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 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 recorded higher increase for both local and imported compared to non-food group which increased by 2.65 percent for both. 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 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 triggerd 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.

NSB quoted increase in prices of vegetables for the increasing CPI for local goods while 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 is the reference period.

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

The CPI shows how much, on an 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 a households.

Sample outlets are permanent establishments or retail shops from which 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. For current CPI, prices are collected from a sample of 557 outlets.

CPI is one of the major indicators that determine the effectiveness of an economic policy. It is used to formulate fiscal and monetary policies and monitor their effect on the overall economy.

Tshering Palden

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