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Inflation down as global oil prices ease off

Cambodia experienced low inflation of around 1 per cent over the last three months thanks to a decline in oil prices, according to the latest data from the National Institute of Statistics.

Inflation went from 0.8 per cent in January to 1.2 per cent in February, before falling marginally to 1.1 per cent rate in March, according to the National Institute of Statistics (NIS), compared to the 1.1 per cent inflation recorded for 2014.

The NIS’s deputy director Khin Song said yesterday that the low inflation rate was helped by a decline in global oil prices, while food prices, the main factor pushing prices up, hadn’t seen significant increases.

“We have not seen any major factors pushing consumer prices up from the end of 2014 until March 2015,” he said.

“We also have a very stable exchange rate between the riel and the dollar, which is a big contribution. Furthermore, neighbouring countries like Thailand, Vietnam and China where we get most of our imports had low inflation, giving us the ability to import more of their products.”

Independent economic analyst Srey Chanthy said declines in oil prices were the main factor keeping inflation low. He added that the government should use this decline in oil prices to increase industrial production.

“The government should promote the expansion of our industry, manufacturing, and production bases, while promoting energy-efficient technologies for the long term,” he said, explaining that oil prices will surely bounce back.

The NIS data showed that rice prices increased 1.1 per cent, while other foods like beef and chicken were up around 3 per cent and 2.3 per cent respectively.

Non-food goods and services like transportation and telecom prices were down 10.5 per cent and 2.6 per cent respectively.

Utilities like housing, water, electricity, and cooking gas declined by almost 2 per cent, partly thanks to a government effort to lower living expenses for garment workers by offering cheaper electricity, housing, and water prices.

The Asian Development Bank’s latest outlook in March projected that Cambodia’s GDP would grow by 7.3 per cent this year, a jump from 7 per cent last year, while the government projected that the inflation rate will stand at 3.5 per cent this year.

Chanthy said the government’s projection was sensible, given that the trend has been a below 5 per cent inflation in the Kingdom.

“The projection sounds reasonable and realistic, and with the resources and institutional instruments that the government has at hand, the government can manage to stabilise it to just that level.”

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