Inflation falling at start of year

Photo by: TRACEY SHELTON
An attendant fills a car with petrol in Phnom Penh. The weighting for petrol under the new CPI methodology has doubled.

The Phnom Penh Post

Written by Hor Hab
Monday, 13 April 2009

Consumer Price Index inflation fell from 8 percent in January to 6.2 percent in February month-on-month according to new methodology employed by National Institute of Statistics

THE National Institute of Statistics (NIS) on Friday said it had revised its methodology for calculating Consumer Price Index (CPI) data in a press conference in which it also announced new figures for the first two months of the year that showed a decline in inflation month-on-month.

The institute, which is under the Ministry of Planning, said that prices increased 8 percent in January, and 6.2 percent in February, compared with the same periods the previous year, data that was produced using the new methodology.

"The inflation is expected to drop further to the lowest point this year," said Khin Song, deputy director general of NIS.

As of January 1, the NIS has calculated CPI based on Phnom Penh prices to represent the whole country when previously an aggregate of the capital, rural and urban areas and an average of these figures combined was used, said San Sy Than, director of the NIS. The institute had also changed the base-year figure to 2006, it said, from 2000 previously. The base year will be changed again for 2013, he added.

Similarly, the weighting for different commodities has also been modified, said the NIS.

The new base year 2006 is calculated according to the prices of 259 items that are classified into 12 groups, while there were only eight groups used previously, most of which were based on goods from five markets in the capital.

The weighting of the Phnom Penh CPI figure has also been adjusted, said San Sy Than. Previously food represented 42.7 percent of the overall figure which has been changed to 44.8 percent in Phnom Penh, he said, and 58 percent for the whole country.

"The new methodology is very good and it's accurate and timely," said San Sy Than, adding that "price changes and the weight attributed to commodity items are the two factors that impact[calculating] inflation".

According to February's CPI report, prices of foods and non-alcoholic beverages increased 8.5 percent, rice was up 32.1 percent and beef prices rose 13.9 percent. The cost of medical products increased 2.9 percent, and clothing and footwear prices climbed 5.3 percent between February 2008 and February 2009.

An Economist Intelligence Unit (EIU) update last month projected that inflation in Cambodia would slow sharply to an average of 0.5 percent this year before increasing again to 4.7 percent for 2010 in response to rebounding demand-side pressure.

"The prices for rice and petrol have fallen sharply since mid-2008, and we forecast that they will continue to do so in 2009 as domestic prices decline in line with projected global trends," said the report.

A lower oil price in 2009 will put downward pressure on inflation in Cambodia, the EIU added.

The NIS has doubled the weighting for petrol to 5 percent, it said.