In­fla­tion in­creases in the last fis­cal year

Business Bhutan - - Money - Lucky Wangmo from Thim­phu

Bhutan has seen a sig­nif­i­cant in­crease in in­fla­tion dur­ing the fis­cal year 2016-17 fol­low­ing the price move­ment in In­dia and the world mar­ket.

Ac­cord­ing to the lat­est Royal Mone­tary Au­thor­ity Re­port, the over­all Con­sumer Price In­dex (CPI) in­fla­tion in­creased to 5.45% in the sec­ond quar­ter (Q2) of 2017 from 3.31% dur­ing the same quar­ter the year be­fore.

“Higher in­fla­tion was an out­come of both an in­crease in do­mes­tic de­mand and tem­po­rary is­sues in the sup­ply chain which led to higher food in­fla­tion,” states the re­port.

The rise in in­fla­tion was recorded par­tic­u­larly in the process of food items that con­trib­uted to the in­crease in CPI in­fla­tion. The food items that at­trib­uted to the in­creased in­fla­tion in­clude veg­eta­bles, fish, fruits and meat.

Apart from food items, non-food items such as hous­ing, wa­ter, elec­tric­ity, gas, and other fu­els, cloth­ing and footwear and ed­u­ca­tion also con­trib­uted to the rise.

The re­port also shows that the do­mes­tic in­fla­tion­ary pres­sure out­weighed im­ported in­fla­tion in the last 12 months. “The con­tri­bu­tions of do­mes­tic in­fla­tion in­creased rapidly over the pe­riod mov­ing the over­all CPI up com­pared to im­ported items,” states the re­port.

Of the to­tal mar­ket bas­ket of 151 items (36 va­ri­eties), the do­mes­tic goods and ser­vices com­prise 48.01% while the im­ported items com­prises 51.99%. This means that 48.01% of the CPI in­fla­tion is con­trolled by do­mes­tic poli­cies while 51.99% is con­trolled by the Re­serve Bank of In­dia (RBI) in­fla­tion tar­gets and the poli­cies of the Govern­ment of In­dia.

Sim­i­larly, the Pro­ducer Price In­dex (PPI) in­fla­tion also in­creased by 5.29% in the sec­ond quar­ter (Q2) of 2017 com­pared to neg­a­tive three per­cent of the pre­vi­ous year.

The year on year per­cent change in PPI by in­dus­try is at­trib­uted to the sig­nif­i­cant in­crease in trans­port and man­u­fac­tur­ing sec­tor. The only sec­tors that re­mained un­changed are the in­for­ma­tion and com­mu­ni­ca­tion, and process of wa­ter sup­ply, sew­er­age, waste man­age­ment and re­me­di­a­tion ac­tiv­i­ties.

Ac­cord­ing to the re­port, the Pur­chas­ing Power of Ngul­trum (PPN) was recorded at Ngul­trum 77 as of June 2017. This means that Ngul­trum 100 in June 2017 was worth only Ngul­trum 77 at De­cem­ber 2012 prices.

The value of Ngul­trum has de­pre­ci­ated by 23% in the past 12 months due to price rise in the econ­omy.

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