𝐑𝐢𝐬𝐢𝐧𝐠 𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐒𝐭𝐫𝐚𝐢𝐧𝐬 𝐇𝐨𝐮𝐬𝐞𝐡𝐨𝐥𝐝𝐬 𝐀𝐧𝐝 𝐒𝐦𝐚𝐥𝐥 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐀𝐜𝐫𝐨𝐬𝐬 𝐂𝐨𝐮𝐧𝐭𝐫𝐲

… 𝒇𝒐𝒐𝒅 𝒂𝒏𝒅 𝒏𝒐𝒏-𝒇𝒐𝒐𝒅 𝒑𝒓𝒊𝒄𝒆𝒔 𝒄𝒐𝒏𝒕𝒊𝒏𝒖𝒆 𝒕𝒐 𝒄𝒍𝒊𝒎𝒃, 𝒂𝒇𝒇𝒆𝒄𝒕𝒊𝒏𝒈 𝒃𝒐𝒕𝒉 𝒓𝒖𝒓𝒂𝒍 𝒂𝒏𝒅 𝒖𝒓𝒃𝒂𝒏 𝒉𝒐𝒖𝒔𝒆𝒉𝒐𝒍𝒅𝒔 𝒂𝒏𝒅 𝒂𝒅𝒅𝒊𝒏𝒈 𝒑𝒓𝒆𝒔𝒔𝒖𝒓𝒆 𝒐𝒏 𝒔𝒎𝒂𝒍𝒍 𝒓𝒆𝒕𝒂𝒊𝒍𝒆𝒓𝒔

By Kezang Choden

The National Statistics Bureau (NSB) has released the Consumer Price Index (CPI) report for
December 2025, showing a continued rise in inflation driven by increases in both food and non-
food prices.

Food inflation increased to 4.36 percent in December 2025. Within this category, the food and
non-alcoholic beverages index rose by 4.35 percent, while the alcoholic beverages and betel nuts
index increased by 4.50 percent. On a month-on-month basis, food inflation rose by 0.76 percent,
driven mainly by a 0.77 percent increase in food and non-alcoholic beverages and a 0.65 percent
increase in alcoholic beverages and betel nuts.

Non-food inflation stood at 2.70 percent in December. Price increases were recorded across
several categories, with clothing and footwear rising by 5.01 percent, restaurants and hotels by
3.81 percent, and health by 3.95 percent. The transport index increased by 2.39 percent.

However, month-on-month non-food inflation declined slightly to minus 0.05 percent,
influenced by a 0.05 percent drop in transport prices, while other indices remained unchanged.
Over the course of 2025, food inflation showed notable fluctuations. At one point, it rose to 3.70
percent due to higher prices of food and non-alcoholic beverages as well as alcoholic beverages
and betel nuts.

In another period, food inflation eased to 2.86 percent, while non-food inflation
slipped to minus 0.02 percent due to lower transport costs. The highest food inflation recorded
during the year was 6.19 percent, largely driven by a sharp increase in food and non-alcoholic
beverages.

The CPI report highlights how these price increases are affecting households. Changlu, a resident
of Kengkhar Gewog under Mongar Dzongkhag, said the steady rise in food prices has placed
growing pressure on rural households that depend largely on farming and limited cash income.

“Most of our income is seasonal, but the prices of basic items keep going up throughout the
year,” he said. According to Changlu, essentials such as rice, cooking oil, and other ration items
now cost significantly more than before, forcing families to adjust their spending priorities.

He explained that while some food is produced locally, households still rely heavily on market
purchases for staples and household supplies. Higher prices mean families are spending a larger
share of their income on food, leaving little for health care, education, or household
improvements.

Changlu also pointed to rising transport costs as an added burden for rural residents. Goods
brought in from towns carry higher prices due to transportation expenses, which are passed on to
consumers.

“By the time items reach our gewog, the prices are already high,” he said. The increase in non-
food expenses has further strained household budgets. Clothing and health-related costs, in
particular, have become harder to manage, especially for families with children or elderly
members. As a result, many households are delaying purchases and reducing spending on non-
essential items.

Changlu’s experience reflects the wider impact of inflation on rural communities in eastern
Bhutan, where income growth has not kept pace with rising prices. He hopes that measures will
be introduced to ensure stable prices for essential goods and improve access to affordable
services in rural areas. His account highlights how inflation is not only an urban concern but also
a growing challenge for rural households striving to maintain their livelihoods and well-being.

Regional data also showed variation. In the eastern region, food inflation increased to 3.43
percent in December, while non-food inflation rose to 2.75 percent, driven mainly by higher
clothing and housing costs. Month-on-month figures showed food inflation at 0.67 percent, while
non-food inflation declined marginally.

In the western region, food inflation rose to 3.94 percent, driven by higher prices of alcoholic
beverages and betel nuts. Non-food inflation in the region increased to 3.32 percent, led by
significant rises in health and clothing costs. Month-on-month non-food inflation in the west
declined slightly due to lower transport prices.

Phuntsho, a resident of Thimphu who works in a private company, said the rising cost of living
has made it increasingly difficult to manage her monthly expenses.

“Earlier, I could plan my expenses and still save a small amount at the end of the month. Now,
most of my salary goes toward basic needs,” she said. According to her, the sharp increase in the
prices of essential ration items has had the biggest impact on her household budget. Staples such
as rice and cooking oil, which are purchased regularly, have become noticeably more expensive
in recent months.

“These are items we cannot avoid buying. Even a small increase affects the overall monthly
cost,” she added. She also noted that rising clothing prices have forced her to cut back on non-
essential spending. Purchases that were once routine are now carefully reconsidered, with
priority given to food, rent, and utilities. As a result, expenses such as clothing, dining out, and
personal needs are often postponed.

Her experience reflects the broader pressure faced by many urban households, particularly those
relying on fixed monthly incomes. While salaries in the private sector have largely remained
unchanged, the cost of basic goods continues to rise, reducing purchasing power and increasing
financial stress. She hopes that measures will be taken to stabilize prices, especially for essential
food items.

“If the prices of basic goods continue to rise, it will become harder for families like ours to
cope,” she said.

Kamal Kumari Tamang, who owns a small shop in Thimphu, said the rising price of betel nut
has directly affected her business and income.

“Earlier, many customers came specifically to buy betel nut. I could sell it at a reasonable price
and still earn a good income,” she said. However, with the cost of betel nut increasing over time,
Kamal has been forced to make difficult adjustments.

To avoid raising prices beyond what customers can afford, she has reduced the quantity of betel
nut in each packet. “If I increase the price, customers complain. If I keep the price the same, I
have to reduce the quantity,” she explained. She acknowledged that some customers are unhappy
with the smaller packets and have expressed dissatisfaction.

Despite this, she said she has no other option, as maintaining the earlier quantity would result in losses.
Rising wholesale prices and transport costs have made it increasingly difficult for small retailers to operate as before.

Kamal Kumari also noted a decline in sales as some customers now buy betel nut less frequently
or in smaller amounts. This has reduced her daily earnings and added to the financial pressure
faced by small shop owners.

Her experience reflects the broader impact of rising food and related prices highlighted in the recent
Consumer Price Index report. As costs continue to rise, small retailers like Kamal Kumari are caught
between higher input prices and customers who are struggling with their own household expenses.

She hopes that prices of essential and commonly consumed items will stabilize soon, allowing small
businesses to operate sustainably without passing the burden on to customers.

The annual average national headline inflation from January to December 2025 increased to 3.50
percent, up from 2.82 percent in 2024. This increase was primarily driven by a steady rise in both
food and non-food prices.

The non-food index rose to 2.53 percent in 2025 from 0.25 percent the previous year, mainly due
to sharp increases in clothing and footwear, which rose by 8.76 percent, and furnishings, household
equipment, and routine household maintenance, which increased by 6.30 percent. In contrast, the
communication and transport indices declined to minus 0.56 percent and minus 2.93 percent respectively.

The report highlights sustained inflationary pressure in 2025, with food prices remaining a key
driver alongside rising costs in clothing, health, and household-related goods. The impact on
both rural and urban households, as well as small businesses, underlines the broad challenges
posed by inflation, particularly for those with limited income growth.