The price of food in Cambodia jumped nearly 40 percent and rice prices nearly doubled from August 2007 to August 2008, according to the latest Consumer Price Index released by the government Monday.
The report shows that prices in general increased by 22.56 percent, a figure based on the price change of a standard basket of goods that includes items as diverse as food, electronics and medical care.
Gasoline prices increased 32.5 percent and diesel jumped 69.47 percent in the 12 month period to August, according to the report, which was issued by the Ministry of Planning’s National Institute of Statistics.
Monday’s CPI, which is normally a monthly report, is the first to be released publicly since early March. Critics have said the government delayed the report’s release for political reasons, though the Minister of Planning said it simply needed to reexamine its calculation methods.
Kang Chandararot, executive director of the Cambodia Institute of Development Study, said inflation is having a number of effects on the economy.
“The consequence in the long term is that we will have a macroeconomic slowdown,” he said.
Urban dwellers, particularly garment workers, are voluntarily leaving their jobs because wages are not keeping pace with the rise in living costs, Kang Chandararot said.
“Some of them are moving to the provinces to work and to help their parents in the rice fields,” he said, adding that urban dwellers are worst off because they don’t produce their own food.
With the poor in financial straits, they cannot save for the future, Kang Chandararot said.
Chan Sophal, president of the Cambodian Economic Association, said inflation will hurt the country’s competitiveness.
He predicted that inflation will decrease, but prices will stay high causing wages and other production costs to rise.
“With higher costs, real growth will slow down,” he said.
Chan Sophal also said the government is using an old formula to determine the CPI and that inflation is actually at about 30 percent.
Hang Chuon Naron, secretary-general of the Ministry of Finance, said the government will announce several initiatives to fight inflation after the new government is formed.
“It is our priority,” he said, declining to comment further until the announcement.
Yang Saing Koma, executive director of the Cambodian Center for Study and Development in Agriculture, said about 40 percent of farmers are benefiting from inflation because they produce surplus rice that they can sell.
But he warned that 20 to 30 percent of the nation’s farmers must buy rice, and those poor farmers suffer more than some urban dwellers who have more opportunities to earn money.
“We are concerned that they will have to sell their land and then things will get even worse for them,” Yang Saing Koma said.