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Bhutan’s inflation has hit 6.87%. When the month-to-month inflation has been cruising above 5% past few months, it’s an expected thing.

The price of essential goods like vegetables is going crazy. Potatoes used to cost Nu.35 and now is Nu.90. More than 2X increase!

Local dry chilies have become 480% more expensive now. Its price had increased from Nu.600 per kilo to about Nu.3,500.

How to understand inflation and its Causes

Inflation is a general rise in the price of goods and services. In another words, it’s the gradual decrease in the value of money.

Our government and banks won’t love the second one. Making people work for something whose value decreases will be hard.

One of the sources of power for them is people’s dependencies on money.

To some extent, inflation is due to the pandemic. The supply chain of goods and services has been hurt.

It’s also due to our government printing more money to meet various economy stimulus programs.

When more and more money is printed, people will more money which will decrease their values.

What our government is doing for it

Our government doesn’t seem to care much about it as much as they do about the bank’s loan recoveries (NPL) and free WiFi.

When inflation is this high, the most impacted are the low income people. Our policy makers won’t have felt the impact as much as we do.

Our HM sold all the shares of BNB and RICB held under Relief Fund and took back more than Nu.2 billion from people’s hands.

If those shares weren’t sold and retrieved that much excess money, I am sure our inflation would be even worse.

How to reduce impacts of inflation

If you aren’t in a low income group & have money in hand, the last thing you should be thinking of doing is keeping it at the bank.

Interest those banks give us for deposits is usually a peanut. In contrast, interest they charge us will choke even a donkey to death.

Properties and precious metals are usually inflation proof. In other countries investing in stock is also good way to reduce inflation impact, but not in Bhutan, at least for now.

This means if you have excess money, you can invest in properties like (houses, land) and precious metals (gold, silver).

However, if you’re in a low income group, at least you can budget daily expenses, postpone big purchases, and avoid taking loans.

Life is really difficult during such times when we’re in low income group. If your jobs don’t demand, also consider moving out of places like Thimphu.