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Logo of Phnom Penh Post newspaper Phnom Penh Post - Inflationary pressure easing

Inflationary pressure easing

Content image - Phnom Penh Post

International commodity costs are plummeting and some local staple food

prices have dropped, but not as much, or as fast, as govt officials

would like

Photo by:
Traccy Shelton

Vegetables and fruit are displayed for sale at Phsar Kap Ko in Phnom Penh.

CAMBODIAN consumers should be paying less for food and other staple goods as lower international commodity prices spill over into local markets. But analysts say that the costs of a wide range of products still remain artificially high.

"Many types of goods and commodities have dropped in price, but they are not down as sharply as we would want," said Hang Chuon Naron, secretary general at the Ministry of Economy and Finance.

Petrol and clothing prices had also fallen sharply, he said, adding that inflationary spikes occur more quickly than price declines.

The government says it is committed to meeting its target of nine percent inflation by next year, down from 17 percent this month, Hang Chuon Naron told the Post on Sunday.

Petrol was down 32 percent on Monday to 3,800 riels (US$0.95) per litre, compared with a peak in August of 5,700 riels per litre.

Meanwhile, high-quality jasmine rice has dropped nearly seven percent from $90 to $84 per 100 kilograms. Mid-grade rice declined eight percent from $76 to $70 for 100kg, and low-quality rice fell nearly 26 percent from $55 to $41 for 100kg.

But prices of meat and poultry have remained high, despite drops for other foodstuffs.

Vai Khen, 54, a chicken vendor at O'Russei market, said prices have stayed firm at 20,000 riels per kilogram.

"I have not dropped my price," she said.

"Chicken is not relevant to the drop in oil prices. It depends on my suppliers. They have not changed their prices, so I have not changed mine."

The cost of fish has dropped slightly, from 15,000 riels to 13,000 riels per kilogram, but not because of fluctuations in oil prices, said Neang Navy, 59, a fish vendor at O'Russei market.

"Lower fish prices are because of greater supply. It is the fish-catching season, so there are plenty of fish," she said.

But with prices falling erratically, some officials said the oscillations have more to do with individual vendors than national economic trends.

Profit taking

Cheam Yeap, a lawmaker for the ruling Cambodian People's Party, said vendors often raise their prices when they see oil or rice costs spike, but refuse to drop them when prices stabilise or decline.

"We think it is necessary for the government to examine this issue in order to make vendors drop their prices," he said.

But Chan Sophal, president of the Cambodian Economic Association, said analysts were less concerned with the inflationary impact of stable meat and poultry prices.

"I think the stability of chicken and fish prices is good for farmers. They will be able to continue supplying the market because the price of oil and rice, which are key economic indicators, has fallen," he said.

Chan Sophal warned lower inflation does not mean that more people have achieved a decent standard of living, only that middle- and lower-income consumers may be more inclined to spend the money they have, while upper-income earners would be largely unaffected.

"We think that all goods will decline in price soon if oil and rice prices remain stable at current rates," he said.

Chea Samon, a clothing vendor at Central Market, said his sales were more affected by fluctuations in the value of the Thai baht and the US dollar, not by shifts in oil or rice costs.

"Prices for clothing have dropped about three percent, but we have not been able to go lower because the foreign currency we trade in has remained stable," Chea Samon said.

Inflation spiked this year at about 25 percent, according to the Asian Development Bank, which said the spiralling cost of living may have pushed as many as two million Cambodians below the poverty line.

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