Inflation stagnant, but fuel costs raise pressure

Photo by: SOVAN PHILONG

Forecourt attendants wait for customers on January 28 at a petrol station on Monivong Boulevard in Phnom Penh. Fuel prices have slowly risen in the past year, contributing significantly to year-on-year inflation of 6.9 percent last month.

via CAAI News Media

Monday, 22 February 2010 15:02 May Kunmakara

CPI inflation stable on December but up 6.9pc on January 2009

PRICES for consumer goods remained stagnant last month compared to December, but climbed 6.9 percent on January 2009 as a result of rising fuel prices.

Figures from the National Institute of Statistics (NIS) showed that food prices continued to slide month on month – by 0.2 percent in January.

Meanwhile, petrol has risen 1.25 percent so far this year to an average 4,000 riels (US$0.96) per litre, and diesel has climbed 1.45 percent to 3,500 riels, Trade Promotion Department figures showed Friday.

“From December to January, there were many items that decreased in price,” said an NIS official who declined to be named. “That’s why overall items did not go up” in price.

Prices for fish and seafood were down 0.7 percent last month compared to December, and fruit and vegetable prices dropped 2.5 percent over the same period, the biggest falls according to the consumer price index (CPI) data.

Still, year-on-year prices are accelerating – CPI inflation went from up an annualised 5.3 percent in December to 6.9 percent last month.

“I think this has definitely come from external factors,” Chan Sophal, president of the Cambodian Economic Association, said Friday. “We see that the price of petroleum on global markets has surged, so it affects us.”

Most of the price rises seen this year compared to last were due to the climbing oil price, he added, which has risen from record recent lows at the beginning of 2009, affecting the cost of goods transported across the Kingdom as the economy continues to rely on imported energy.

Oil for March delivery hit a five-week high in New York Friday to $79.81 a barrel as US Federal Reserve Chairman Ben Bernanke increased the emergency bank lending rate, a sign that the economy – and therefore demand for fuel – was picking up, analysts said.

NIS figures showed that fuel prices overall in Cambodia were up 8.2 percent since January 2009, while natural gas alone was up a huge 35.4 percent.

Overall, fuel directly contributed to a 1.5-percentage point rise in price year on year, but it also had a major indirect influence – the cost of transportation rose 14.1 percent in the past year, contributing a further 1.4-percentage-point rise.

“If we look at that time [last year, during the worst of the economic crisis], demand was down, so prices were also down,” said the NIS official.

Minister of Economy and Finance Keat Chhon insisted Wednesday that Cambodia had recorded positive growth last year; however, international analysts including the International Monetary Fund, World Bank, Asian Development Bank and Economist Intelligence Unit have all estimated small contractions of up to about 2.8 percent.