Following a five-month suspension of the consumer price index last year, a Ministry of Planning official said Monday that the government has once again delayed publication of the CPI, which measures price changes and is used to calculate the country’s inflation rate.
CPP Minister of Planning Chhay Than has previously admitted that the suspension of the CPI last year, and by extension the concealing of the official inflation rate, was done in part to make things look better ahead of the July 2008 national election, which was won by Prime Minister Hun Sen’s ruling CPP.
The most recent inflation statistics, released in late January, measured price increases from December 2007 to December 2008 at 13.46 percent. More than two months later, the Ministry of Planning has not reported the monthly statistics for January and February.
But this recent delay, said Nger Chhayleang, secretary of state at the Planning Ministry, is to recalibrate and update the methodology used to determine the inflation rate.
“This is not a political issue. This a technical issue,” he said by telephone Monday. “The delay will not last very long.”
He added that he did not know when the CPI will be released.
A change in methodology was the same justification used last year when publication of the CPI was suspended.
In January 2008, the Ministry of Planning changed the methodology used to calculate the inflation rate from the consumer items listed in the CPI. With the buying patterns of Cambodians changing, a new weighting was given to certain goods included in the CPI, which resulted in a spike in the inflation rate. The government then suspended the monthly CPI reports until after the July election, with Chhay Than citing the need to rework the methodology as the reason why.
But when the CPI reports returned in August, the ministry merely switched back to the old method of calculation, which was based on consumer habits from 2000, and which experts say do not accurately reflect spending patterns. Last month, the minister admitted that politics had a significant role in the decision to suspend the reports, telling a reporter, “We just wanted to keep the good feeling [of citizens] before the election.”
In fact, during the five month suspension of the reports last year, inflation hit an all-time high of 25.7 percent in May, according to the World Bank. The government still has not provided figures for any of the months between February and June of last year. After inflation began to decline and the ruling CPP the election were numbers released for July, which showed inflation at 22 percent from July 2007 to July 2008.
Chhay Than declined to comment when contacted Monday.
The provincial, municipal, and district council elections are scheduled for May.
Nger Chhayleang said on Monday that the government must decide on a new methodology that is more accurate than the one being used now.
“If we lie everyone will know,” he said about the inflation rate.
A new methodology, if approved, will create a more accurate CPI, said Chan Sophal, the president of the Cambodian Economic Association.
“I think it’s a good thing for the new methodology to come out now,” said Chan Sophal, who has previously criticized the government for using an out-of-date calculation strategy.
He noted however that the change in methodology is occurring now that inflation has ceased to be a major issue due to prices declining worldwide and the global economic crisis.
“There is no issue with inflation. It’s not a problem whichever method they use. The inflation is low,” he said.
Stephen Higgins, CEO of ANZ Royal Bank, agreed that inflation is a dead issue for the moment and that government restrictions on lending helped curtail it.
“Everyone knows that growth is an issue now,” he said.
A number of major financial institutions have been predicting slowed economic growth for 2009, with the International Monetary Fund now predicting a 0.5 percent contraction of the Cambodian economy.
SRP lawmaker Yin Sovann criticized the decision to delay the CPI as more of the government playing politics with vital economic data.
“They are worried about the affects of the economic crisis,” he said.