The inflation rate may have peaked at record highs of well over 20 percent in 2008, but the latest government-issued Consumer Price Index, released Monday, shows the year-end rate to be 13.46 percent.
Based on government figures, the inflation rate reached a 15-year high in July at 22 percent, although the World Bank offered an even higher figure—a staggering 25.7—for the month of May. No government figures are available for May, as the Ministry of Planning in March suspended the issuance of CPI reports as the inflation rate began to balloon.
But since July, government CPI reports have shown the inflation rate steadily declining, registering 20 percent in September, 18.12 percent in October and 15.74 percent in November.
The CPI measures price fluctuations over a 12-month period of a selected basket of goods, from essentials such as food and fuel to luxury items, and is a key economic indicator that determines the country’s official inflation rate.
“Food prices are significantly higher than a year ago,” Chan Sophal president of the Cambodian Economic Association said Tuesday. “But, the trend is reversing,” he said.
Minister of Planning Chhay Than could not be reached for comment on the new figures and Khin Song, deputy director of the ministry’s CPI department, declined to comment.
While prices in December remained high compared to December 2007, consumer price changes on a month-to-month basis are now showing smaller fluctuations than earlier in 2008, according to the report.
For example, in December 2008 the CPI decreased 1.47 percent compared to November because of price decreases on a broad range of goods including food, housing, utilities, transportation and communication, according to the report.
Food prices, which heavily influence the CPI, increased 24.59 percent from December 2007 to December 2008, but decreased 2.23 percent from November to December, according to the report.
Critics, however, say the government’s current CPI is based on an out-of-date method of calculation that underestimates actual inflation.
According to Chan Sophal, rather than 22 percent, the July 2008 inflation rate should have been pegged at around 32 percent, and December’s inflation was more likely to be at about 18 percent.
The current CPI doesn’t reflect current buying trends in which food and gasoline are in higher demand than ever before, Chan Sophal said, adding that politics may play a role in the decision not to adopt a more accurate method of calculation.
Though the government earlier last year adopted a new method of calculating the CPI, they scrapped it soon after as the inflation rate began to rapidly climb.
Kaing Monika, external affairs director for the Garment Manufacturers Association of Cambodia, said that inflation has created difficulties for both factories and workers.
The high cost of raw materials has hurt factory owners, and garment workers began leaving their jobs in factories for the countryside in April 2008 because inflation had made city living costly, Kaing Monika said.