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High oil prices fuel inflation

High oil prices fuel inflation

Consumer Price Index shows petrol prices up by 38.5 percent since last year

INFLATION reached almost 7 percent in March as petrol prices in Cambodia rocketed up 38.5 percent over last 12 months, new statistics show.

According to the monthly Consumer Price Index (CPI), released by the National Institute of Statistics on Saturday, inflation stood at 6.7 percent in March this year, when compared a year earlier.

Although this is lower than the 7.3 percent annualised inflation seen in February, the report states that the month-on-month rate increased to 0.7 percent in March from 0.2 percent in February.

“The main increase … was due to: food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; water; electricity, gas and other fuels; healthcare costs; and transport,” concluded the report.

It noted that fuel price hikes were a significant inflationary factor. Petrol prices have risen by 38.5 percent since March 2009, and 5 percent month on month.

Diesel is up 33.9 percent since March 2009 and prices for fuel and oils for personal transport have risen by 37.8 percent.

On Sunday, premium and regular petrol at petrol stations in Phnom Penh were selling at 4,650 riels (US$1.10) per litre and 4,400 riels a litre respectively.

In the last month, crude oil on international markets climbed 4.33 percent to $86.22 per barrel on Sunday from $82.64 a barrel at the end of March.

Sok Chheang, executive director of Cambodia Trucking Association, which represents 16 large transport companies, said Sunday that profits in his sector have declined as international oil prices have soared.

“It is difficult for us to increase transport fees because oil prices have increased gradually. Transport companies are just applying surcharges for customers to cope with the rise in oil prices,” he said.

Commentators believe that the latest CPI reflects that international oil prices have had a knock-on effect on the cost of consumer goods.

Cambodia Economic Association President Chan Sophal said Sunday that the inflation rate was reasonable and predicted that it would continue to increase in 2010.

“I expect a 10 percent rate of inflation this year due mainly to continuing rises in oil prices,” he said.

“Another factor is that consumer demand this year will be higher than last year, because of the better economic situation. More demand would push up the prices,” he added.

This month, the International Monetary Fund (IMF) forecasted that Cambodia’s inflation rate would be about 5.2 percent this year, and 7.7 percent in 2011.

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