Double-Digit Inflation Mirrors Regional Trend, Economists Say

Following a regional trend, inflation in Cambodia rose 10.8 percent from December 2006 to December 2007, according to a consumer price index report from the Nation­al Institute of Statistics.

The report measures what people in Cambodia pay for a diverse bas­ket of goods included in the con­sumer price index, ranging from concrete and fuel to rice and pantsuits.

Perhaps most dramatically, the food, beverages and tobacco category saw a price increase of nearly 20 percent.

Another NIS report obtained Wednesday, still in draft form, lists inflation in Cambodia running at 16.3 percent for the same period.

Khin Song, deputy director-general for the NIS, said the 16.3 percent inflation figure was taken from unofficial numbers based on a new calculation of the CPI and is subject to change. The official CPI is based on 1993 consumption rates.

He and several economists would not comment on the unofficial report, which was presented in January to a limited audience that in­cluded economists and government officials.

Economists warn that high inflation could cause poor people to cut back on essentials like food, and in the long term could slow investment or disrupt industries with wage strikes.

John Nelmes, Cambodia resident representative of the Interna­tional Monetary Fund, said the double-digit rate of 10.8 percent inflation is high, though other countries like Vietnam are also experien­cing high inflation caused by high oil and food prices. Vietnam, he said, also has double-digit inflation.

“It’s not a cause to panic be­cause, simply put, what we’ve seen is a result of foreign factors which Cambodia does not have any control over,” he said.

Nelmes said the long-term risk for Cambodia’s economy is a sustained and domestically created in­flation. If things like labor strikes and higher wages increase production costs, that could hurt Cambodia’s competitiveness in the region.


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