1st Quarter Prices Rose as Riel’s Value Tapered

Rumors, politics, seasons and attitudes all weigh against the prices of goods in the capital, a quarterly government report on consumer prices shows, and a government official said this could mean price ripples during July’s elections.

The consumer price index, which measures the cost of more than 200 goods sold in Phnom Penh, rolled upward 1.76 percent during the quarter that ended in March 31, compared with the same quarter a year ago, according to the Ministry of Planning.

Khin Song, deputy director general of the ministry’s General Statistics Department, said he was concerned how easily rumors and political situations so easily affect prices in Phnom Penh.

“I’m very concerned that the price of goods will increase during national elections in July,” he said.

The prices of goods are on the up­swing for a variety of reasons, but one them is certainly because merchants use rumor as an ex­cuse to raise prices, Khin Song said.

For instance, the prices of green beans jumped from 1,700 riel to 3,000 riel per kilogram on rumors that eating the beans would ward off severe acute respiratory syndrome.

Political situations have also contributed to unexpected price hikes, such as the jump in gasoline prices during the Iraq war and after the border with Thai­land was shuttered. Gas prices reached 2,600 riel per liter in March, but have dropped back to 2,200 riel this month.

The government should come up with a strategy to keep prices sta­ble, as well as keep the value of the riel from falling against the dollar, Khin Song said. This is the only way to prevent an economic crisis, Khin Song said.

The riel fell from 3,932 to the dollar in December 2002 to 3,946 in March. Today, 4,005 riel buys one US dollar.

The slight increase in prices and inflation had few economists and analysts really worried, but some speculated this could also be a signal that the cost of living in Phnom Penh is moving upward, even as the value of the riel has dipped.

Kang Chandarat, an economist for Cambodia Development Resources Institute, shrugged off the idea that the rise in the consumer price index means a major impact on the lives of people living in Phnom Penh. It was a simple representation of seasonal market forces causing price to increase, he said.

He also doubted that lower value of the riel would hurt many.

“Those who pay in dollar will have no problems,” he said.

The index noted that the cost of transportation rose 3 percent during the first quarter 2003, compared with 0.54 percent during the same quarter in 2002.

Even though transportation prices are up, motorcycle taxi driver Oum Lim said he still can’t make enough to feed his family without his wife’s earnings.

“My profits can’t afford the needs of the family, if my wife stops raising chicken and pigs at home,” Oum Lim said.

He earns about 15,000 riel per day, minus gas costs of about 6,500 riel, he said. After cigarettes and food, he keeps about 5,000 riel every day.

In fact, the cost of transport operation compared with March last year has increased nearly 13 percent. The cost of gasoline has increased 19 percent since this time last year, the government report said.

Seasons too, have a serious affect on prices. Take for example, mangoes. The cost of mangoes can swing a full dollar per dozen during high season.

“It depends on the season,” said Mann Yem, 45, a vendor at Phsar Chas. “If more ripe mangoes flood the market, it’s cheap. When there’s a shortage, the price is up.”

Fashion sense, too, has an effect, said Sun Kanika, a 19-year-old clothing vendor at the Sorya Shopping Center.

Customers “like movie stars” buy dresses almost every week, while “regular people” buy clothes just once a month, she said.

“If more people come to buy the same produce, I rise,” she said. “If less people come to us, we sell at a low price.”

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