Inflation 'manageable' in first half of 2010

Photo by: JULIE LEAFE
Motorists refuel at Total on Rue de France in Phnom Penh yesterday. Rising petrol prices have helped fuel inflation this year.

via Khmer NZ

Tuesday, 20 July 2010 15:00 May Kunmakara

INFLATION, recorded at 5.22 percent in the first half of the year, has grown at a “stable” and “manageable” rate according to commentators.

According to National Institute of Statistics consumer price index released yesterday, the first six months of 2010 saw inflation reach 5.22 percent compared to the same period last year. Quarter-on-quarter inflation was slight at 0.3 percent.

The NIS figures show that prices rose almost 4 percent in the second quarter, compared to the same period of last year.

That rate is lower than the 6.53 percent annual price rise recorded in the first quarter.

Khin Song, deputy director general of NIS, said inflation was “very stable” this year – especially when compared to past data.

In 2009, Cambodia recorded deflation of 0.7 percent, while in 2008 the Kingdom saw annual inflation at 19.7 percent, according to the NIS.

The main driver of change in the past year was a volatile global oil market, and the main price stabiliser was a more self-sufficient Cambodian economy, he said.

“I think this year we have a very stable inflation rate as we can see little change from month to month, despite the fluctuation of external influences – namely the global economy,” he said.

“We can deal with it because now our local people can produce enough rice, meat and [other] foods for local consumption.

“This [inflation figure] is not serious because it is still around the 5 percent that both international institutions and the government projected.”

Kang Chandararot, senior economist and president of the Cambodia Institute for Development Study, said the inflation rate had remained at a manageable level.

“The growth will impact our economy a little, but it can be managed,” and the increase was also related to the weaker riel, he said.

The National Bank of Cambodia has already bought US$17 million worth of riel this year to stop a decline in the value of the local currency, and a further $13 million is slated for auction.

The NIS report showed the fuel price – an important indicator for inflation – rose 24.9 percent compared to the first half of last year. Electricity, gas and others fuels rose 7.51 percent, transport was up 9.7 percent, while food and non-alcoholic beverages increased 9 percent.

The cost of alcoholic beverages and tobacco rose by 4.25 percent in the first half, clothing went up 2.88 percent, and housing and water rose 4.53 percent.

Both Khin Song and Kang Chandararot were hopeful CPI would slow during the second half.

“I do hope it will be much better than last year,” Khin Song said.

“I think the CPI rate will be getting a bit lower from now on because it is the harvest season,” Kang Chandararot said.