CPI peaks at 6.61 percent in a year

Food and alcoholic drinks made up more than half of the overall rise among the 12 key divisions in 2021



With a 0.08 percentage point increase from the previous month, the consumer price index (CPI) in July jumped 6.61 percent as compared to July 2021.

The National Statistics Bureau’s July 2022 CPI data shows that over the previous year, prices for food increased by 5.82 percent while those for non-food items increased by 7.29 percent.

With 58 percent of the increase, non-food item continues to contribute more to the overall growth than food components, which account for the remaining 42 percent.

Although the rate has decreased compared to the previous three months, the report notes that among the 12 components, transportation continues to register the biggest gain with 12.79 percent.

With an increase of 6.24 percent and a 42 percent overall contribution, food and alcoholic beverages are the biggest contributors. According to the report, all other divisions had growth except for communication, which decreased by 0.04 percent.

After experiencing a decline in June, the CPI rose by 1.16 percent month over month in July, with increases in both food and non-food items with 1.12 percent and 1.20 percent, respectively.

According to the survey, food and alcoholic beverages made up nearly half of the overall rise. Clothing and footwear came in second with a 2.98 percent increase, accounting for 23 percent of the overall increase. Due to an increase in tertiary college tuition, education experienced the biggest monthly increase of all the categories at 3.15 percent.

Additionally, the report indicates that between 2020 and 2021, the cost of household goods and services grew by 7.35 percent. Compared to 2020, when the growth was 5.63 percent, this was a 1.72 percentage point increase.

“The higher rate in 2021 was caused by a 5.62 percent increase in non-food, as opposed to a 1.24 percent increase in 2020. About 60 percent of the overall inflation rate in 2021 was attributable to food prices, with the other 40 percent coming from non-food items. Inflation in 2020 was mostly driven by increases in food costs, which accounted for over 90 percent of the overall increase,” the report stated.

Food and alcoholic drinks made up more than half of the overall rise among the 12 key divisions in 2021, followed by transportation with a contribution of approximately 15 percent and apparel and footwear with a contribution of around 11 percent.

In 2021, alcoholic beverages and betel nuts experienced the biggest increases with 16.66 percent, while education fees experienced the lowest increases with 0.66 percent.

All other sectors saw growth, except for communication, which experienced a 9.90 percent decline.

Compared to December 2012, the purchasing power of Ngultrum (PPN) as assessed by the CPI is Nu 60 as of July 2022. This implies that Nu 100 in July 2022 is only worth Nu 60 at rates from December 2012. As assessed by the CPI, the PPN decreased by 6.20 percent between July 2021 and July 2022 because of rising prices in the economy.

The CPI measures average price changes over time in the basket of goods and services that people buy. It displays the average percentage change in prices of products and services during a specific reference period, also referred to as the index reference.

According to the report, the CPI accounts for the items and services that households use, and a sample of those commodities and services is chosen using information on household spending to assess the inflation that households have experienced.

According to the products’ price volatility, the prices of the sampled goods and services are collected from urban regions in 20 Dzongkhags on a monthly, quarterly, and annual basis. Purposive sampling is used to choose the retail locations for data collecting, considering the location’s attractiveness and product availability.

CPI baskets has a total of 113 items (314 varieties) classified according to Classification of Individual Consumption According to Purpose (COICOP).  A total of about 450 outlets are selected for pricing.