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PPI records 5.14 percent inflation

Measured from producer’s perspective in the last quarter of 2017 (October, November and December), inflation increased by 5.14 percent compared to the last quarter of 2016, according to the producer price index (PPI).

This means local producers experienced a price rise of 5.14 percent in the last quarter of the 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. CPI records the retail price and measures changes in the price level of consumer goods and services purchased by households.

National Statistical Bureau publishes a monthly CPI report. PPI is published quarterly.

PPI covers domestically-produced goods and services that are destined for domestic as well as export market. The sectors included are logging, mining and quarrying, manufacturing, utilities (electricity and water), transport and communication.

PPI report stated that logging sector recorded a consistent increase in the third quarter months by 2.48 percent. Mining and quarrying sector recorded an increase by 2.46 percent, 1.83 percent and 2.11 percent in October, November and December respectively.

Manufacturing sector recorded an average increase of 7.52 in the last three months. The electricity and gas sector recorded an increase by 4.29 percent on an average.

Slight increase of 1.24 percent and 0.14 percent was recorded in the transport and communication sector.

There was no change in price of water supply.

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 influence the CPI to a great extent.

Tshering Dorji

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