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Transport sector records highest year-on-year inflation at 6 percent, while electricity prices decline 3.46 percent
According to figures released by the National Statistics Bureau (NSB), the Producer Price Index (PPI) recorded average year-on-year inflation of 2.73 percent in the second quarter of 2026, covering April to June. The index measures the average change in prices of goods and services from the perspective of producers of domestically produced goods and services.
The transport sector recorded the highest average year-on-year inflation at 6 percent, followed by manufacturing at 5.23 percent. The electricity sector recorded a year-on-year decline of 3.46 percent.
Year-on-year inflation stood at 2.30 percent in April, increased to 3.16 percent in May and declined to 2.75 percent in June. On a month-on-month basis, inflation stood at 0.65 percent in April, increased to 0.72 percent in May and declined to minus 1.01 percent in June.
The monthly PPI across all industries stood at 99.88 in April, increased to 100.59 in May and declined to 99.58 in June. Transport, forestry and logging, and manufacturing were the major drivers of price increases, while the electricity sector exerted downward pressure due to lower energy charges.
For taxi operators, rising operating costs are becoming an increasing concern.
Penjor from Thimphu said he was forced to sell his taxi because of the high cost of vehicle maintenance and expensive spare parts. He said rising maintenance costs, including taxes such as GST on vehicle parts, made it increasingly difficult to operate the taxi as a viable source of income.
Fuel prices are also relevant to the rise in producer prices in the transport sector. The government had earlier added the Related Adjustment Factor (RAF) to petrol and diesel prices to recover the cost of earlier fuel price support. Changes in fuel prices and transportation costs continue to affect the cost of operating vehicles.
Pema Tobgay, a Thimphu resident who has driven a taxi for five years, said rising fuel costs have forced him to stop taking passengers on long-distance trips and focus mainly on local trips.
He said he now spends a minimum of Nu 1,500 a day to refuel his taxi, leaving him with less income after covering operating costs. With his entire family depending on his taxi income, he said meeting household expenses has become challenging.
The year-on-year inflation trend stood at 0.73 percent in July 2025, 1.61 percent in August, 0.37 percent in September, 0.30 percent in October and minus 1.48 percent in November. It then increased from minus 0.54 percent in December to 0.31 percent in January 2026, 0.79 percent in February and 1.54 percent in March before reaching 2.30 percent in April and 3.16 percent in May.
The latest figures indicate that producer price inflation has continued to rise since the beginning of 2026, driven mainly by transport, forestry and logging, and manufacturing. The decline in electricity prices has partly offset the increase, but higher transport and manufacturing costs could continue to put pressure on businesses and, eventually, consumer prices.
