Inflation level 'manageable'

via CAAI

Thursday, 27 January 2011 15:01 May Kunmakara

THE cost of goods measured by the Consumer Price Index rose by 4 percent in 2010, a figure called “manageable” by economic experts yesterday.

The percentage – calculated by The Post from data released by the National Institute of Statistics - matched a previous International Monetary Fund projection, and was slightly below a 5 percent Asian Development Bank estimate for 2010 released last April.

Economists said yesterday that inflation levels were in line with rates of growth in the Kingdom during 2010, which had generally avoided the high price increases seen before the global financial crisis.

CPI statistics during August and September 2008 showed prices increasing over 20 percent compared to the year previous.

In 2009, the full-year CPI saw deflation of 0.7 percent.

Khin Pesy, a researcher for Economic Institute of Cambodia, said yesterday: “The rate is manageable.”

Kang Chandararot, an independent economist and President of Cambodia Institute for Development Study, agreed but cautioned that higher rates could affect the Kingdom’s economy.

“It should make us clearly consider [what to do] if we let rates climb higher – there will be an impact to the people’s earnings, as the rate of economic growth was around 5 percent in 2010,” he said.

Kang Chandararot attributed the inflation rate to global currency fluctuations.

“I believe that the devaluation of the US dollar in the global market was the main factor which impacted goods. Prices went up because we normally use dollars to import goods,” he said.

“On the other hand, the growth of our economy as well as the global economy enhanced demand.”

The slight deflation of 2009 had been caused because of the impact of global economic crisis which impacted on worker incomes, hitting consumer demand, he added.

The economists forecast a broadly similar level of price increase for the year ahead.

The EIC’s preliminary prediction estimated 6 percent inflation, while the ADB’s report predicted 5 percent inflation in 2011 and Kang Chandararot aimed at 4 percent.

“We are keeping our prediction of 4 percent for the coming year,” said Kang Chandararot. “I hope the value of the US dollar picks up on the global market.”

The largest increases measured by the CPI index during the year, calculated by The Post, were a 4.28 percent increase in the cost of food and non-alcoholic beverages, 3.83 percent for housing, water, electricity, and fuels, and a 6.79 percent recorded increase for transportation costs.