On a monthly basis, consumer prices remained unchanged in August and September despite civil servants across all categories getting significant salary raise in July. Consumer prices in the country reached a new low, falling continuously in the third quarter. Annual inflation in September fell to 2.5 per cent according to the National Statistics Bureau.
Consumer Price Index is defined as ‘measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services.” In other words, it indicates the cost of living for a typical consumer, but it’s not a straight measurement of living costs.
The low consumer price index reflects the low inflation rate of the country.
September’s annual rate at 2.5 per cent is the lowest of the year so far. This means consumers paid only 2.5 per cent more for goods and services, this September than a year ago. The annual inflation rate equalled a year high at 3.1 per cent in July before slipping in the following months.
Overall, the rate at which prices of goods and service increase slowed down for both food and non-food items. Food prices are growing at 3.48 per cent, while non-food items are growing at 1.91 per cent.
Except for alcoholic beverages, beetle nuts and household equipment, prices of all other goods and services in the CPI market basket grew at a slower rate compared to the preceding month.
The Royal Monetary Authority (RMA) does not have an explicit inflation target. The RMA’s latest Monetary Policy Statement states that it “attempts to align the CPI inflation with the Indian inflation target of four per cent within a band of plus or minus two per cent, since 52 per cent of the items in the CPI basket are imported from India.”
The policy statement further added, “low and stable CPI inflation in recent years benefited both investors and savers with positive real returns.” The RMA expects inflation to remain moderate with price growth for both food and non-food items slowing down.
Sherub Dorji
