Inflation rises to highest level in two years

2026-03-16 - 11:15

Headline inflation rose to 5.76 percent in January 2026, the highest level recorded in the past two years, driven by increases in both food and non-food prices. Food inflation increased to 7.33 percent in January. Within the food category, the index for food and non-alcoholic beverages rose by 6.10 percent, while the index for alcoholic beverages and betel nuts saw a sharp rise of 23.71 percent. Non-food inflation also rose, reaching 5.38 percent in January 2026. The increase was mainly driven by higher prices in housing and utilities, which rose by 11.99 percent, followed by restaurants and hotels at 9.63 percent and health at 7.64 percent. Meanwhile, the transport index recorded a decline of 1.24 percent. Month-on-month inflation increased to 3.40 percent in January 2026, driven by increases in both food and non-food prices. Food inflation on a month-on-month basis rose to 3.48 percent. This increase was largely driven by a 2.23 percent rise in the food and non-alcoholic beverages index and a 20.25 percent increase in the alcoholic beverages and betel nuts index. Month-on-month non-food inflation increased to 3.51 percent. The housing and utilities index rose by 9.58 percent, restaurants and hotels increased by 7.17 percent, and the health index rose by 4.56 percent. However, the transport index declined by 2.20 percent. Year-on-year inflation in the capital city increased to 7.10 percent in January 2026. The increase was driven by a 9.63 percent rise in the food index and a 4.81 percent increase in the non-food index. Food inflation in the capital city rose to 9.63 percent, with the food and non-alcoholic beverages index increasing to 9.06 percent and the alcoholic beverages and betel nuts index rising to 18.26 percent. The non-food index in the capital city increased to 4.81 percent. This was mainly driven by a 13.91 percent increase in the restaurants and hotels index, followed by a 12.50 percent rise in miscellaneous goods and services and a 9.97 percent increase in housing and utilities. The transport index, however, recorded a decline of 4.03 percent. Month-on-month inflation in the capital city increased to 4.41 percent in January 2026. This was driven by increases in both food and non-food prices. Food inflation rose to 5.22 percent, with the food and non-alcoholic beverages index increasing to 4.72 percent and the alcoholic beverages and betel nuts index rising to 12.85 percent. The non-food index increased to 3.66 percent in the capital city. The increase was driven by a 12.87 percent rise in restaurants and hotels, an 8.71 percent increase in housing and utilities and an 8.34 percent rise in the health index. The transport index declined by 5.40 percent. In the central region, year-on-year headline inflation increased to 7.86 percent in January 2026. Food inflation in the region rose to 8.09 percent, largely driven by an 8.74 percent increase in the food and non-alcoholic beverages index and a 23.31 percent increase in alcoholic beverages and betel nuts. Non-food inflation in the central region increased to 6.02 percent. This was mainly driven by a 15.41 percent increase in housing and utilities, followed by a 10.08 percent rise in clothing and footwear and a 13.69 percent increase in restaurants and hotels. The transport index recorded a decline of 4.12 percent. In the eastern region, year-on-year headline inflation increased to 3.26 percent in January 2026, driven by increases in both food and non-food indices. Food inflation in the region rose to 4.60 percent, with the food and non-alcoholic beverages index increasing to 3.78 percent and the alcoholic beverages and betel nuts index rising to 15.60 percent. Non-food inflation in the eastern region increased to 1.71 percent. The increase was mainly driven by a 10.09 percent rise in the health index, followed by a 7.92 percent increase in restaurants and hotels and a 4.60 percent rise in housing and utilities. Meanwhile, the transport index declined by 5 percent. In the western region, year-on-year headline inflation increased to 6.86 percent in January 2026. Food inflation in the region rose to 7.7 percent, mainly driven by a 6.07 percent increase in the food and non-alcoholic beverages index and a 30.70 percent rise in alcoholic beverages and betel nuts. Non-food inflation in the western region increased to 5.96 percent. The increase was driven by a 13.36 percent rise in housing and utilities, followed by a 7.66 percent increase in health and a 7.28 percent rise in restaurants and hotels. The transport index recorded a decline of 1.32 percent. The purchasing power of the Ngultrum, as measured by the consumer price index, stood at 51.8 in January 2026 relative to December 2012. In other words, Nu 100 in January 2026 is equivalent in value to only Nu 51.8 at December 2012 prices. Between January 2025 and January 2026, the purchasing power of the Ngultrum fell by 3.26 percent due to rising prices in the economy.