At 4.23 per cent, the country’s inflation rate for last year is the lowest in the past four years. The inflation rate measures how much the prices of goods and services go up over time. The actual inflation figure is also over two percentage points lower than the International Monetary Fund’s projection for 2023. Economists say the drop in inflation rates could mainly be due to fewer economic activities and low money supply in the market.
The country’s inflation rate rose from 5.63 per cent in 2020 to 7.35 per cent in 2021 during the pandemic-stricken years. In 2022, which saw the reopening of international borders and resumption of economic activities, the rate at which prices of goods and services increase dropped to 5.64 per cent, before seeing a further decline last year.
Last year, there was no significant increase in prices of food items compared to 2022.
However, the rate of increase in the prices of non-food items slowed from 7.10 per cent in 2022 to 4.44 per cent last year.
Within the non-food category, most of the divisions such as clothing and footwear, and restaurants and hotels among others, saw a slight change in prices in 2023.
While prices in the health division saw a notable increase of almost 10 percentage points between 2022 and 2023.
Price increase in the transportation division also slowed down significantly, last year, owing to falling fuel prices as compared to 2022.
Meanwhile, the value of ngultrum continued to depreciate over the course of 2023. The purchasing power of ngultrum was Nu 56.4 as of December last year as compared to December 2012 prices.
This means an item that could be purchased at Nu 56.4 in December 2012 costs Nu 100 as of December 2023.
The purchasing power of ngultrum decreased by 4.75 per cent in the last one year due to an increase in the prices of goods and services.