Inflation Rate Falls Slightly in November

Consumer prices in Phnom Penh fell 1 percent in November compared to the previous month, driven mainly by a drop in the cost of food, according to figures released by the ministry of planning yesterday.

November’s consumer price index shows the cost of food decreased 1.4 percent, while the price of housing, water, electricity and gas together decreased 0.7 percent.

Despite the drop in the monthly inflation rate, the consumer price index shows prices in November to have increased by 3.2 percent compared to the same month in 2009.

The price of fish decreased 4 percent in November compared to the previous month, while the cost of gasoline fell 1.9 percent. Meat fell 1.6 percent and rice 0.5 percent over the same period. Automobile prices continued to fall, dropping 0.5 percent compared to October, and are down 7.3 percent year on year.

Prices of vegetables and fish tend to slump at this time of year as crops are harvested after the rainy season and fishing starts up again after a five-month ban to replenish stocks, pushing up supply.

The International Monetary Fund estimates the inflation rate will reach 4 percent this year and steadily rise to 5.2 percent in 2011.

Although prices are currently holding relatively steady, consumer goods are still markedly higher than prior to the global food crisis in 2008, which saw the year-on-year inflation rate rise to 25 percent.

Economists say that the risk of inflation rising next year is low, as demand among consumers remains subdued. The inflation rate in Cambodia sits in contrast to other countries in the region, such as Vietnam and Indonesia, which have inflation rates of 11 percent and 6 percent respectively.

“Demand will not be very much next year because income will not increase so much,” said Chan Sophal, president of the Cambodian Economic Association.

Nonetheless, if the US dollar continues to depreciate against other world currencies, import and production costs related to imports could rise further and, hence, result in higher prices, he said.

 

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