Phnom Penh Post, Issue 16 / 24, November 30 – December 13, 2007
While the complaints about gas prices soaring to 4,450 riels per liter continue, another crescendo of worries is coming from consumers about hikes in the cost of food and other commodities.
"Now everything is so expensive! Before one kilo of pork is 10,000 riel but now it's 16,000 riel," said Kang Ling Hua, who runs a small food shop O'Russey market. She had just added 1,000 riel per meal on her previous price of $1 for a plate of food, because she said inflation had eroded all of her profit.
"What is even more terrible is the price of gas," she said.
As businesspeople like Hua complained about "no profit," vulnerable salaried workers were worrying about how to stretch their wages to cover their needs.
"It's getting hard for me now because the price of goods keeps on increasing but not much my salary," said Chay Ty Hui, a worker who earns $80 per month.
According to statistics from the National Institute of Statistics, the inflation rate in Cambodia this year has risen to 6.5% in September. At the end of 2006, it was 2.8%.
Among the 200 items in Cambodia's Consumer Price Index, the price increases in the Food, Beverage and Tobacco category saw the most dramatic increases. That category was up 13% in September, compared with 6.4% in September 2006.
Several economists said Cambodia's increased inflation is being caused by high international food prices, currency inflation as well as the sharp increase in oil prices.
"The main factor is higher international food prices, including, importantly, China where food price inflation rose to 18% in August," John Nelmes, IMF Resident Representative in Cambodia, told the Post.
Nelmes said the effect of the weak U.S. dollar is hard to separate from other factors, but it is also a factor that affects inflation because it make goods imported from neighboring countries more expensive for Cambodians.
"Another factor is the recent sharp increase in international price of oil, which has recently fed through to higher fuel prices in Cambodia."
Another view came from Neou Seiha, Economic Researcher of the Economic Institute of Cambodia, who said the limited local supply of food contributes to inflation because the agricultural sector in Cambodia increased only about 2-3% this year, not enough to meet increased demand.
Some local suppliers are choosing to export agricultural products to other countries due to the higher international food prices, making domestic food prices increase even more sharply.
Tal Nay Im, Director General of the National Bank of Cambodia, said the depreciation of the dollar affects inflation in Cambodia because Cambodia is a dollarized economy. But she put the greater blame on the appreciation of Thai Baht in relation to the riel and the dollar.
"Cambodia imports a lot of things from Thailand, so when the Baht appreciates, even if the value of the goods stays the same we still need to pay more riel or dollar for that same product. We don't produce so much stuff, not even daily products, so we need imported goods. Inflation is inevitable."
Nay Im said inflation wouldn't affect the garment industry because the transactions are done in dollars.
Nay Im said with inflation still in single digits, no monetary policy changes are needed.
Nelmes reiterated that, "The appropriate policy response is to allow the economy to adjust to those higher prices by its own accord," he said.
The National Institute of Statistics projected inflation in 2008 at 5.5% and said it will stay at about that level for the next few years depending on international oil supply and the U.S economy.
Meanwhile, for the average Cambodian, the situation is tough.
"I hope the goods prices will not increase anymore. I can't afford to pay for food that gets expensive month by month with the same money my children give me," said Liang Phalla, 56, negotiating a price for some dried fish at O'Russey market.
"Now everything is so expensive! Before one kilo of pork is 10,000 riel but now it's 16,000 riel," said Kang Ling Hua, who runs a small food shop O'Russey market. She had just added 1,000 riel per meal on her previous price of $1 for a plate of food, because she said inflation had eroded all of her profit.
"What is even more terrible is the price of gas," she said.
As businesspeople like Hua complained about "no profit," vulnerable salaried workers were worrying about how to stretch their wages to cover their needs.
"It's getting hard for me now because the price of goods keeps on increasing but not much my salary," said Chay Ty Hui, a worker who earns $80 per month.
According to statistics from the National Institute of Statistics, the inflation rate in Cambodia this year has risen to 6.5% in September. At the end of 2006, it was 2.8%.
Among the 200 items in Cambodia's Consumer Price Index, the price increases in the Food, Beverage and Tobacco category saw the most dramatic increases. That category was up 13% in September, compared with 6.4% in September 2006.
Several economists said Cambodia's increased inflation is being caused by high international food prices, currency inflation as well as the sharp increase in oil prices.
"The main factor is higher international food prices, including, importantly, China where food price inflation rose to 18% in August," John Nelmes, IMF Resident Representative in Cambodia, told the Post.
Nelmes said the effect of the weak U.S. dollar is hard to separate from other factors, but it is also a factor that affects inflation because it make goods imported from neighboring countries more expensive for Cambodians.
"Another factor is the recent sharp increase in international price of oil, which has recently fed through to higher fuel prices in Cambodia."
Another view came from Neou Seiha, Economic Researcher of the Economic Institute of Cambodia, who said the limited local supply of food contributes to inflation because the agricultural sector in Cambodia increased only about 2-3% this year, not enough to meet increased demand.
Some local suppliers are choosing to export agricultural products to other countries due to the higher international food prices, making domestic food prices increase even more sharply.
Tal Nay Im, Director General of the National Bank of Cambodia, said the depreciation of the dollar affects inflation in Cambodia because Cambodia is a dollarized economy. But she put the greater blame on the appreciation of Thai Baht in relation to the riel and the dollar.
"Cambodia imports a lot of things from Thailand, so when the Baht appreciates, even if the value of the goods stays the same we still need to pay more riel or dollar for that same product. We don't produce so much stuff, not even daily products, so we need imported goods. Inflation is inevitable."
Nay Im said inflation wouldn't affect the garment industry because the transactions are done in dollars.
Nay Im said with inflation still in single digits, no monetary policy changes are needed.
Nelmes reiterated that, "The appropriate policy response is to allow the economy to adjust to those higher prices by its own accord," he said.
The National Institute of Statistics projected inflation in 2008 at 5.5% and said it will stay at about that level for the next few years depending on international oil supply and the U.S economy.
Meanwhile, for the average Cambodian, the situation is tough.
"I hope the goods prices will not increase anymore. I can't afford to pay for food that gets expensive month by month with the same money my children give me," said Liang Phalla, 56, negotiating a price for some dried fish at O'Russey market.
15 comments:
No problem, once our rural area is fully developed, that will certainly to cut our inflation by at least half.
Meanwhile, we'll just going to have to import more goods from everywhere to increase competitions and make everything affordable for everyone.
Under AH HUN SEN leadership everything has to be imported from the Thaicong and the Vietcong and when the fucken Thaicong and the fucken Vietcong raise the price and they start to complain! Now what is the lesson to be learnt here! The lesson is if you are the producers and you will control the price and you don't give a fuck who wants to buy your products or not!
AH HUN SEN never once look at the issue of food supply for Cambodia as a security issue! The fact is food supply is a security issue which every Cambodian leaders must not ignore because there are always some dirt poor Cambodian people who couldn't afford to buy food because of the high price manipulate by the Thaicong and the Vietcong!
If Cambodian people want to be consumers and they must be willing to be producers also otherwise these dirt poor Cambodian people will be at the mercy of the Thaicong and the Vietcong!
They will produced their own products, 2:48, but right now we have to import; otherwise, we will be dead.
The country inflation is under control.
No need to worry.
MOI
MOI, the CPP's mercenary/Bullshitter sucks big time!
7:46 PM:
With all due respect, you may call me a lightning rod for the CPP Party.
The victory will certain be ours in 2008! You people can deny, but this is an undisputable and irrefutable fact.
CPP 2008
MOI
If the leader of any nations who judges the POOR with thier kind heart thier POWER will be establisthes stronger,PEOPLE will support you forever.
It is about supplies and demands. Cambodia ought to invest more in education. From education it will lead Cambodia into something more attainable through understanding of the basic investment 101. When people understand how to invest their time and money, thus supplies and demands will come in place and when the control is in place, thus the entire control of economy is also in place.
Many infrastrucutres throughout Cambodia have not been constructed for the purpose of refining the economy, thus, the focus on building our infrastructures is also critical. The government has done what it can it is the responsibility of our people to pitch in and help from all sides to achieve the ultimate goal.
Thank You
You are absolutely Corrects knowledge is power,to solve all kind of problem for our country.
Our leader need to invest more money and time to education for our New genteration for their future.Thank you
I thin we should drag idoit sam dach dai chou sena bat dey Tmil hun sen to educate first, then our country would be ok..no more inflation...hahhhhaaaaaaaa.
Perhaps some of the KI clients' need to be washed with soap for that profanity that's coming out from that stinking mouth.
The truth of the matter is you will never have a plausible debate or discussion here,because these people have problems with their mouth. That's why I decided to treat them like dirt.
MOI
Now MOI is trying to serve a purpose after all his comments he made on here. He insulted all members on here, now a change of heart. He has never worked for any NGO`S or any from of Humanitary work for cambodia. Now he decide to start one. Any Ideas anyone? Any to help this lonely fool? Just trying to pleased his superiors. Anyone? No? No Takers? Wow your off to a wrong start. Heres a start, try not to think your smarter than other people. Rather, let them speak their minds and listen.
That my lonely friend is my contribution to your cause.
The first I might add.
12:56, you can always bring a horse to the water, but you can make the horse drink it if the horse is not thirsty. Get it?
Remember all parties, Sometime the person that exchange ideas on this web page just only their kindness heart.He's not a politician,Just a simple person that love his country and his people.
Yeah, but that didn't work out well at all in the 70's between Somdach Euv's, Sarimatak's, and Pol Pot's party. They all think of good things for Cambodia, but the Khmer people end up getting screwed big time. Therefore, we don't want none of that shits no more. Leave us (Khmers) alone, will ya?
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