Rising transportation costs, the main driver of inflation

Except for the housing and utilities which decreased by 0.04 percent, the prices of all the other eleven major divisions have increased.

SONAM PENJOR | Thimphu

With the increase in transportation cost which hit 11.8 percent, the price of consumer goods and services increased by 4.59 percent in November 2022 compared to the same month last year.

The increase in transportation cost, according to the Consumer Price Index (CPI), November 2022 published by National Statistics Bureau, contributed to 39 percent of the overall inflation followed by food and non-alcoholic beverages recording a 2.24 percent increase, and contributing 22 percent to the overall inflation rate.

However, the rate of increase dropped for both food with 2.26 percent and non-food with 6.62 percent compared to October.

Amongst goods, it states that clothing and footwear recorded the second highest increase among the 12 major divisions with 7.28 percent, contributing to 10 percent to the overall inflation.

Whereas, month-on-month CPI in November is 0.66 percent, which is an increase from October.

Both the food and non-food prices increased in comparison to the previous month, the increase for food items accounts to 1.12 percent and for non-food, it accounts to 0.27 percent, states the CPI report.

Except for the housing and utilities which decreased by 0.04 percent, the prices of all the other eleven major divisions have increased.

Similarly, the prices of household goods and services increased by 7.35 percent from 2020 to 2021. This was an increase of 1.72 percent compared to 5.63 percent increase in 2020. The higher rate in 2021 was due to increase in the non-food by 5.62 percent compared to 1.24 percent increase in 2020.

It also states that food prices contributed to about 60 percent of the overall inflation rate in 2021 and non-food contributing to 40 percent of the total increase. In 2020, food prices were the main driver of the inflation rate contributing to almost 90 percent of the total increase.

Among the 12 major division, the CPI states that food and alcoholic beverages contributed to more than 50 percent of the total increase in 2021, followed by transport with about 15 percent and clothing & footwear with about 11 percent contribution to the total increase.

Alcoholic beverages and betel nuts recorded the highest increase with 16.66 percent while education fees recorded the lowest increase with 0.66 percent in 2021. All other divisions recorded an increase except for communication which dropped by 9.90 percent, the CPI report states.

Meanwhile, the purchasing power of Ngultrum (PPN) as measured by CPI is Nu 60 as of November 2022 compared to December 2012. This means, Nu 100 in November 2022 is worth only Nu 60 at December 2012 prices.

The PPN as measured by CPI has dropped by 4.39 percent in the last one year from November 2021 to November 2022 due to price increase in the economy.