Gov’t: Formula Change Delays Inflation Data

The government has not releas­ed a monthly report on inflation since March, when the consumer price index showed an inflation rate of 18.7 percent from January 2007 to January 2008.

Officials said Wednesday they do not know if an updated CPI re­port will be available before the July na­tional election. The Min­ist­ry of Planning’s National Insti­tute of Stat­istics normally releases an updated consumer price index every month, but the latest public report tracking changes in the retail price of goods contains data that is four months old.

Minister of Planning Chhay Than said Wednesday that the de­cision not to publish a CPI report was not related to the election but rather because of several ministries studying and recalculating how the CPI is determined.

“We cannot hide the inflation rate. People would find it in the markets,” Chhay Than said in a telephone interview, adding that the global food crisis and rising oil prices were to blame for the current high prices.

The CPI tracks the price of a wide variety of products from foodstuffs to mobile phones. It gives more weight to things like gasoline and food-that is, items that are bought in greater proportion to other items.

In March, the National Institute of Statistic CPI report-the last to be released-showed food prices having risen more than 20 percent from January 2007 to January 2008. The report, which was based on new calculation criteria, reflected changes in consumer buying patterns that altered the weighting that the NIS gave to certain items.

Under the old formula inflation was measured at 10.8 percent from December 2006 to December 2007, but it leapt to 16.3 percent over the same time period when calculated using the newly-determined proportions.

Chhay Than said Wednesday that the relevant ministries needed to agree on those new proportions, and make sure they are accurate.

NIS Deputy Director-General Khin Song, who has previously commented on the CPI, said he knew nothing about the next CPI report or when it would be released.

The government’s lack of information on rising inflation in the country coincides with governments in Thailand and Vietnam releasing reports of record inflation rates.

From May 2007 to May 2008 consumer prices rose 25.2 percent in Vietnam, while Thailand’s inflation rate rose 7.6 percent, a 10-year high.

Commenting on the CPI reports, SRP lawmaker Son Chhay said that the government was hiding bad news to avoid any losses in the election.

“[I]f the government would release this, it would not give any credit to the government because [inflation] is getting worse in these four months,” he said.

Though high inflation is a problem regionwide, Son Chhay said the government could do more to mitigate the problem. He added the government should have moved away from pegging Cambodia’s currency to the US dollar, which has been significantly devalued in the past year.

“By relying on the US dollar to stabilize the currency, it is devaluing” the riel, he said.

Despite the lack of official CPI reports, indications of strong inflationary pressure are unmistakable.

Rice prices ranged from some 1,400 riel to 2,400 riel per kilogram in January and now range between 3,600 to 4,000 riel per kilo, according to the Cambodian National Rice Millers Association.

The price of premium gasoline is now at about 5,500 riel per liter at major gas stations in Phnom Penh, compared to about 4,500 in early March.

Kang Chandararot, executive director of Cambodia Institute of Development Study, said that the lack of CPI reports could slow the economy. Investors need the information to analyze the economic health of the country, he said.

“If you don’t know about the CPI, then you don’t know the demand for products and services.” he said. “This can lead to a misallocation of funds,” he added.

Chan Sophal, president of the Cambodian Economic Association, said inflation is a regional problem but the government should address it as strongly as possible.

“Inflation is [a] very political issue, but I don’t think we should be shy talking about reality. It is not only Cambodia. It is in many countr[ies],” he said.

“I don’t know why they won’t release [the CPI].”

CPP National Assembly First Vice President Nguon Nhel said that voters understand that inflation is a global problem.

“The government does not hide information about inflation,” he said. “People will still vote for the CPP,” he added.




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