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Inflation remains below 3.5 percent until November 2018

The price of goods and services between November 2017 and November 2018 increased by 3.09 percent, according to the consumer price index (CPI).

This was one of the highest year-on-year inflation last year.

However, the annual average inflation rate in 2018 was one of the lowest inflation recorded in the country at 2.65 percent. But this is excluding year-on-year inflation for December 2018.

The average inflation in 2017 was about five percent and 3.22 percent in 2016.

Lower inflation does not translate into a decrease in the price of commodities. It means a slower rate of increase in prices of goods and services.

According to figures from the National Statistical Bureau (NSB), between November last year and November 2017, prices of local goods and services increased by 2.69 percent, mainly triggered by an increase in prices of food.

Imported goods and services recorded a higher increase at 3.46 percent, contributing to more than half of the overall inflation.

The NSB has identified a sample of goods and services representative of all goods and services purchased by the households called market basket, containing 151 items of 436 varieties.

The bureau has further classified these items into 12 major groups.

Within this group, restaurant and hotel services recorded the highest increase in the price of 6.90 percent in November.

Within the food group, price of fish increase by 8.4 percent in November Last year compared with November 2017. This was followed by milk, cheese and egg (7.8 percent); Narcotics at 6.55 percent, and fruits (6.05 percent).

Since the sale of tobacco and tobacco products are illegal in the country, the NSB included areca nut under narcotics.

In the non-food group, price of fuel and lubricants increased by 9.86 percent in November last year compared with November last year. Catering services experienced a price rise of 7.42 percent during the same period.

Since inflation erodes the purchasing power of ngultrum (PPN), as of November last year, Nu 100 was worth only Nu 73 in December 2012.

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

Tshering Dorji

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