…𝒕𝒉𝒆 𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒊𝒏𝒈 𝑷𝒐𝒘𝒆𝒓 𝒐𝒇 𝑵𝒈𝒖𝒍𝒕𝒓𝒖𝒎 𝒂𝒔 𝒎𝒆𝒂𝒔𝒖𝒓𝒆𝒅 𝒃𝒚 𝑪𝑷𝑰 𝒉𝒂𝒔 𝒅𝒓𝒐𝒑𝒑𝒆𝒅 𝒃𝒚 4.15 𝒑𝒆𝒓𝒄𝒆𝒏𝒕 𝒊𝒏 𝒕𝒉𝒆 𝒍𝒂𝒔𝒕 𝒚𝒆𝒂𝒓 (𝒇𝒓𝒐𝒎 𝑱𝒂𝒏𝒖𝒂𝒓𝒚 2022 𝒕𝒐 𝑱𝒂𝒏𝒖𝒂𝒓𝒚 2023)
According to the Consumer Price Index (CPI) for January 2023, released by the National Statistics Bureau on February 28, 2023, “The purchasing power of Ngultrum as measured by CPI is Nu. 59 as of January 2023 compared to December 2012. This means, Nu. 100 in January 2023 is worth only Nu. 59 at December 2012 prices. The Purchasing Power of Ngultrum as measured by CPI has dropped by 4.15 percent in the last year (from January 2022 to January 2023) due to increasing prices in the economy”.
As compared to the same month in the previous year, the cost of goods and services for consumers increased by 4.33 percent in January 2023. The rate of increase dropped for both food and non-food with 1.49 percent and 6.81 percent respectively.
The greatest force in overall escalation was transportation, which saw an increase of 12.36 percent and contributed 43 percent to overall inflation. The Russia-Ukraine war, which has raised fuel prices, is to attribute for the increase in transportation costs.
This was followed by apparel and footwear, which had a rise of 7.39 percent and contributed 16 percent to overall inflation. Food and non-alcoholic beverages saw an increase of 1.28 percent, adding 14% to overall inflation.
Increased inflationary pressures in Bhutan are being caused by rising import prices for food and fuel.
Inflation and the drop in consumer spending have had an effect on store owners. In Thimphu, one of the store owners said, “Customers frequently seek for discounts when they are shocked by the price of an item, but we can only give a small discount because we are also bringing at higher price. If we gave them the discount they wanted, we would be at loss.”
Kinley from mini-Mart in Taba claimed that there has been a decline in both the market and the quantity of customers. “The number of clients as well as quantity of goods purchased have been declining over the time and it could due to inflation against no increase of income thereby leading to declining of customers’ purchasing power and many leaving aboard, making it difficult for us to sustain”.
Kelzang said, “The cost of everything in Bhutan is high. In Bhutan, I can only buy one item for Nu. 1000 but, if I travel to Jaigoen, the boarder area, I can purchase a variety of items for that sum. I believe, Bhutanese excitements with border gates opening were due to cheaper pricing for goods across the border”.
“I think the decline in the value of the Ngultrum may be one of the factors for individuals moving abroad. The rising cost of living can’t keep up with old steady income, individuals are leaving Bhutan in search of more reasonable lifestyles,” said Kuenga Wangmo.
Month-on-month CPI increased from November to January, coming in at 0.56 percent. Prices for both food and non-food items increased as compared to December.
According to the CPI report the prices of household goods and services increased by 5.64 percent from 2021 to 2022. This was a drop of 1.71 percentage point compared to 7.35 percent increase in 2021. The lower rate in 2022 was due to the lower rate of increase in the food items by just 3.95 percent compared to 9.38 percent increase in 2021.
Food prices contributed to about 34 percent of the overall inflation rate in 2022 and non-food contributing to 66 percent of the total increase. In 2021, food prices were the main driver of the inflation rate contributing to almost 60 percent of the total increase.
Food & alcoholic beverages contributed to more than 33 percent of the total increase in 2022, followed by transport with about 33 percent and clothing & footwear with about 13 percent contribution to the total increase.
In 2022, among the twelve major groups, transport recorded the highest increase with 12.59 percent while alcoholic beverages and betel nut recorded the lowest increase with 1.16 percent. All other divisions recorded an increase except for communication which dropped by 1.46 percent.
According to the Ministry of Foreign Affairs and External Trade’s records, more than 30,000 people were residing abroad as of January 2023. So many Bhutanese living abroad for a sizable population, one of the reasons could be due to increasing prices in the economy with little option for earning more.