Increasing spending on transport, health, and education continues to hurt the average Bhutanese pockets. The latest figures released by the National Statistics Bureau (NSB) show prices in these three key sectors saw an increase of 10.50 per cent, 10.43 per cent, and 5.67 per cent respectively.
Similarly, the NSB in its latest consumer price index (CPI) for February reported the year-on-year inflation rate at 4.27 per cent. This means that the prices of goods and services increased by an average of 4.27 per cent compared to the same month last year.
Food items, which include alcoholic and nonalcoholic beverages, and betel nuts, saw a decline in the rate of increase over the past 12 months. The inflation rate for food items dropped from 4.10 per cent to 1.91 per cent between February 2022 to February 2023.
Similarly, non-food products saw a slight drop of 0.5 percentage points during the same period to 6.32 per cent. Among the other non-food products, prices of clothing and footwear increased by 7.39 per cent, while prices of furnishings and household equipment increased by 4.68 per cent.
According to the Ministry of Finance’s In-House Debt Sustainability Analysis (DSA) report, the inflation estimate for the current fiscal year is 4.4 per cent. The current rate is also under the Royal Monetary Authority’s upper threshold of 6 per cent.
Despite inflationary rate easing, any estimates of inflation are highly uncertain and volatile. According to the DSA report, 80% of Bhutan’s import is associated with India and any inflationary pressure in India is expected to transmit to domestic inflation though with a time lag.
Meanwhile, the value of Ngultrum continues to depreciate. The purchasing power of Ngultrum (PPN) is Nu 59 in February 2023 as compared to December 2012. This means Nu 100 in December 2012 is worth only Nu 59 today. The PPN of Ngultrum dropped by 4.10 per cent in the last year.
Sherub Dorji
