…𝑨𝒎𝒊𝒅𝒔𝒕 𝒂 5.07% 𝒔𝒖𝒓𝒈𝒆 𝒊𝒏 𝒚𝒆𝒂𝒓-𝒐𝒏-𝒚𝒆𝒂𝒓 𝑪𝒐𝒏𝒔𝒖𝒎𝒆𝒓 𝑷𝒓𝒊𝒄𝒆 𝑰𝒏𝒅𝒆𝒙 (𝑪𝑷𝑰) 𝒇𝒐𝒓 𝑶𝒄𝒕𝒐𝒃𝒆𝒓 2023, 𝒂 𝒏𝒖𝒂𝒏𝒄𝒆𝒅 𝒊𝒏𝒇𝒍𝒂𝒕𝒊𝒐𝒏 𝒍𝒂𝒏𝒅𝒔𝒄𝒂𝒑𝒆 𝒖𝒏𝒇𝒐𝒍𝒅𝒔, 𝒓𝒆𝒗𝒆𝒂𝒍𝒊𝒏𝒈 𝒂 𝒔𝒖𝒓𝒑𝒓𝒊𝒔𝒊𝒏𝒈 𝒅𝒆𝒄𝒍𝒊𝒏𝒆 𝒊𝒏 𝒄𝒐𝒎𝒎𝒖𝒏𝒊𝒄𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔 𝒂𝒏𝒅 𝒂 𝒔𝒊𝒈𝒏𝒊𝒇𝒊𝒄𝒂𝒏𝒕 13.47% 𝒖𝒑𝒕𝒊𝒄𝒌 𝒊𝒏 𝒉𝒆𝒂𝒍𝒕𝒉 𝒆𝒙𝒑𝒆𝒏𝒔𝒆𝒔.
By Susmika Subba
In a report released by the National Statistical Bureau, the year-on-year Consumer Price Index (CPI) for October 2023 indicated a 5.07 percent indicating significant changes in the Consumer Price Index (CPI) for October 2023 compared to the same month in the previous year. The overall 5.07 percent increase suggests a general uptrend in the cost of living, impacting both food and non-food items.
The data reveals a nuanced picture of inflation, with both food and non-food prices rising by 5.25 percent and 4.91 percent, respectively. The rise in both food (5.25 percent) and non-food (4.91 percent) prices indicates a broad-based increase in the cost of essential goods and services. This can affect households’ budgeting and spending patterns, potentially leading to decreased purchasing power.
Delving into the twelve major divisions, it’s noteworthy that prices increased across the board, except for communication, where a decrease of 2.86 percent was observed. Notable increases include health costs rising by 13.47 percent, housing and utilities experiencing a 9.58 percent increase, and clothing and footwear prices climbing by 7.03 percent.
The notable decrease of 2.86 percent in communication costs is an exception to the general trend. This could be due to factors such as technological advancements or increased competition in the communication sector, providing some relief to consumers in this specific area. However, the significant increases in health costs (13.47 percent), housing and utilities (9.58 percent), and clothing and footwear (7.03 percent) highlight areas where consumers might experience heightened financial pressure. Rising expenses in these essential sectors can impact overall household financial well-being.
Shifting focus to the month-on-month changes in October 2023, the CPI recorded a 0.67 percent increase from September 2023. This reflects slight upticks in both food and non-food prices, with a 2.84 percent rise in transport costs and a 2.19 percent increase in furnishings, household equipment, and routine household maintenance. The rise in both food and non-food prices indicates a broad-based increase in the cost of essential goods and services.
However, there were nuances in specific sectors, as the price of food and non-alcoholic beverages saw a marginal decrease of 0.03 percent. Communication costs experienced a decline of 2.9 percent, and the prices in the restaurants and hotels category dropped by 0.29 percent.
Examining the transition from 2021 to 2022, the report unveils a 5.64 percent increase in household goods and services prices. This signifies a notable decline of 1.71 percentage points compared to the 7.35 percent surge observed in 2021. The moderation in the 2022 rate is attributed to a restrained increase in food items, which rose by 3.95 percent compared to the previous year’s steeper 9.38 percent surge.
Food prices played a pivotal role in shaping inflation, contributing approximately 34 percent to the overall inflation rate in 2022. In contrast, non-food items contributed 66 percent to the total increase, a notable shift from 2021 when food prices were the primary driver, accounting for nearly 60 percent of the total increase.
Among the twelve major divisions, food and alcoholic beverages made the largest contribution to the total increase in 2022, accounting for over 33 percent. This was followed by transport at around 33 percent, and clothing and footwear at approximately 13 percent.
In 2022, transport recorded the highest increase within the twelve major groups, soaring by 12.59 percent, the highest increase in transport costs (12.59 percent) among the twelve major groups may impact commuting expenses and the overall cost of goods and services. While alcoholic beverages and betel nut recorded the lowest increase at 1.16 percent. All other divisions demonstrated an increase, except for communication, which saw a decline of 1.46 percent.
Looking at the purchasing power of the Ngultrum, as measured by the CPI, it currently stands at Nu. 57 in comparison to December 2012. This implies that the value of Nu. 100 in October 2023 is equivalent to only Nu. 57 at December 2012 prices. Over the past year, from October 2022 to October 2023, the Purchasing Power of Ngultrum has experienced a decline of 4.82 percent due to the overall increase in prices across the economy.
The decline in purchasing power, from Nu. 100 in October 2022 being equivalent to Nu. 57 in December 2012, highlights the real impact of inflation on the ability of consumers to buy goods and services. The 4.82 percent decline over the past year underscores the challenge of maintaining the same standard of living amidst rising prices.
As economic trends continue to evolve, these insights provide a comprehensive understanding of the factors influencing inflation and the subsequent impact on the purchasing power of the Ngultrum.