Your Nu 100 of 2012 is now worth Nu 64 due to inflation

The purchasing power of Ngultrum is 64 as of August 2021 as compared to December 2012. This means your Nu.100 note of December 2012 saved up in a piggy bank only fetch you items worth Nu.64 today. In the past 12 months, the purchasing power of Ngultrum has dropped by 5.03 percent because of price increase in the economy which accounts for higher cost of living in the country.

According to a report by National Statistics Bureau (NSB), the annual inflation rate rose by 5.30 percent with the main contributing factors being food and non-alcoholic beverages. The food and non-alcoholic beverages saw an increase of 3.55 percent on the account of increase in the price of fats and oils by 20.63 percent, cereals and bread by 7.04 percent and meat by 6.60 percent. The increase in the prices of petrol and diesel (around 20 percent) has fueled the transportation charges by 8.72 percent. Alcoholic beverages and betel nuts saw an increase of 14.9 percent owing to increase in betel nuts price by 21.09 percent which is the highest increase in prices.

On the other hand, the charges in communications department have dropped by 10.92 percent thanks to reduction in call and data charges in the past one year.

The year-on-year consumer price index, which is a measure of average change in prices over time in a fixed market basket of goods and services, has increased by 5.30 percent in August 2021, compared to the same month of previous year.

The CPI is used to measure inflation, especially from the consumer’s point of view; higher CPI means the cost of goods and services is higher and you have to pay more for that fixed basket of goods. The CPI of food items have increased by 4.25 percent and non-food items by 6.19 percent compared to August 2020. CPI of clothing and footwear increased by 9.86%, Housing and utilities increased by 6.58%, furnishing and household increased by 5.46%, health increased by 3.07%, transport increased by 8.72%, Communications decreased by 10.92%, Recreation and culture increased by 2.18%, there is no change in the cost of education, restaurants and hotels increased by 7.84% and miscellaneous goods increased by 7.14%.

During the pandemic in August 2020, the year-on-year percentage change in CPI saw drastic increase of 7.44%. The CPI index in August 2019 was 100.22 points and it increased to whooping 107.68 in August 2019 which is a 7.44% increase. This year, the CPI only increased to 113.38 points in August 2021 (5.30% increase) as compared to CPI in August last year. The price of goods and services are now higher compared to pre-pandemic times except in communications department.

The monthly inflation rate has increased by 0.23 percent. Non-food prices recorded higher increase of 0.43% while food prices recorded decrease by 0.02 percent for August month from month-to-month report. Transport is the main contributor to non-food inflation with 1.22 percent increase and betel nuts and leaves for food with the drop of 1.52 percent.

According to Anup Kumar Rai, Regional Director of Department of Revenue and Customs in Phuntsholing, the number of vehicles in mini dry port is below the required level. The RD said, “Previously we used to have a lot of import vehicles and the loaders struggled to transship the goods, but now we hardly have around 50-60 vehicles and the loaders are pressuring us to get more vehicles.”

According to the OCP, the fluctuations in prices could be due to changes in International prices as well as import taxes from third countries.

The purchasing power of Ngultrum is 64 as of August 2021 as compared to December 2012. This means your Nu.100 note of December 2012 saved up in a piggy bank only fetch you items worth Nu.64 today. In the past 12 months, the purchasing power of Ngultrum has dropped by 5.03 percent because of price increase in the economy which accounts for higher cost of living in the country.

According to a report by National Statistics Bureau (NSB), the annual inflation rate rose by 5.30 percent with the main contributing factors being food and non-alcoholic beverages. The food and non-alcoholic beverages saw an increase of 3.55 percent on the account of increase in the price of fats and oils by 20.63 percent, cereals and bread by 7.04 percent and meat by 6.60 percent. The increase in the prices of petrol and diesel (around 20 percent) has fueled the transportation charges by 8.72 percent. Alcoholic beverages and betel nuts saw an increase of 14.9 percent owing to increase in betel nuts price by 21.09 percent which is the highest increase in prices.

On the other hand, the charges in communications department have dropped by 10.92 percent thanks to reduction in call and data charges in the past one year.

The year-on-year consumer price index, which is a measure of average change in prices over time in a fixed market basket of goods and services, has increased by 5.30 percent in August 2021, compared to the same month of previous year.

The CPI is used to measure inflation, especially from the consumer’s point of view; higher CPI means the cost of goods and services is higher and you have to pay more for that fixed basket of goods. The CPI of food items have increased by 4.25 percent and non-food items by 6.19 percent compared to August 2020. CPI of clothing and footwear increased by 9.86%, Housing and utilities increased by 6.58%, furnishing and household increased by 5.46%, health increased by 3.07%, transport increased by 8.72%, Communications decreased by 10.92%, Recreation and culture increased by 2.18%, there is no change in the cost of education, restaurants and hotels increased by 7.84% and miscellaneous goods increased by 7.14%.

During the pandemic in August 2020, the year-on-year percentage change in CPI saw drastic increase of 7.44%. The CPI index in August 2019 was 100.22 points and it increased to whooping 107.68 in August 2019 which is a 7.44% increase. This year, the CPI only increased to 113.38 points in August 2021 (5.30% increase) as compared to CPI in August last year. The price of goods and services are now higher compared to pre-pandemic times except in communications department.

The monthly inflation rate has increased by 0.23 percent. Non-food prices recorded higher increase of 0.43% while food prices recorded decrease by 0.02 percent for August month from month-to-month report. Transport is the main contributor to non-food inflation with 1.22 percent increase and betel nuts and leaves for food with the drop of 1.52 percent.

According to Anup Kumar Rai, Regional Director of Department of Revenue and Customs in Phuntsholing, the number of vehicles in mini dry port is below the required level. The RD said, “Previously we used to have a lot of import vehicles and the loaders struggled to transship the goods, but now we hardly have around 50-60 vehicles and the loaders are pressuring us to get more vehicles.”

According to the OCP, the fluctuations in prices could be due to changes in International prices as well as import taxes from third countries.

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One comment

  1. Karma Thinley

    There is a need for government intervention in controlling inflation in the country. It is acceptable that the price of imported goods is high but the goods which are produced within Bhutan cannot be as high as the import goods. Concern authority should take necessary steps to reduce inflation in the country. If not, Inflation expectations will cause banks to increase interest rates, making it more expensive for businesses and individuals to borrow money. Once that happens, the only way to stop inflation is to raise the interest rates high and cause a recession. If inflation gets too high, the Bank Reserve is likely to have to raise interest rates to try to slow the economy down and prevent spiraling inflation of the type last seen in the United States in the late 1970s and early 1980s. That kind of Fed action has led to a recession in the past.

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