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Inflation in the first three quarters of the year, from producers’ perspective has increased by 3.42 percent compared to the first quarter of 2016, according to the producer price index.

PPI records 3.42 percent price rise

Inflation in the first three quarters of the year, from producers’ perspective has increased by 3.42 percent compared to the first quarter of 2016, according to the producer price index.

This means that local producers experienced a price rise of 3.42 percent in the first quarter this year. This is different from the consumer price index (CPI), which measures price rise from the consumers’ perspectives.

PPI or the ex-factory price is the price at which producers sell goods to wholesale dealers and CPI, which is the retail price. It measures changes in the price level of a market basket of consumer goods and services purchased by households.

The CPI recorded an inflation of almost five percent between June last year and June this year. The National Statistical Bureau publishes a monthly CPI report while PPI is published quarterly.

The PPI report stated that the logging sector recorded a consistent increase in all months of the first quarter months by 2.48 percent. While mining and quarrying sector recorded an increase by 4.83 percent, 6.39 percent and 2.89 percent in January, February and March respectively, the manufacturing sector recorded an increase of 0.06 percent, 2.9 percent and 3.97 percent in the same months. The electricity and gas sector recorded an increase of 4.29 percent on an average.

Transport sector recorded an increase of more than 8.6 percent. Water Supply and Information and Communications sector has no change price in all three months.

PPI in Bhutan only covers domestically produced goods and services, and the sectors include logging, mining and quarrying, manufacturing, utilities (electricity and water), transport and communications sector.

While there is a strong relation between PPI and CPI, a local economist said that Bhutan’s case is different, as the country does not produce much.

PPI is normally the lead indicator of inflation, but since most goods and services are imported, except for utilities like electricity, water supply and communications, it does not affect the overall inflation in the country.

For producers, prices increased by 2.36 percent in January; 3.78 percent in February and 4.10 in March compared to the same months last year.

During the same period consumers felt a corresponding increase in price by more than 5 percent every month in the first quarter.

Tshering Dorji

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