Analysts’ expectations of accelerating inflation in fourth quarter are confounded as NIS reports CPI dropped month-on-month for the first time since February
CAMBODIA experienced month-on-month deflation in October, figures released by the National Institute of Statistics (NIS) showed Tuesday, countering analysts’ predictions that inflation would speed up in the last quarter.
The Kingdom’s consumer price index (CPI) decreased 0.3 percent compared with September – the first time prices have fallen on a monthly basis since February. Prices rose 0.5 percent from August to September.
Compared with the same month a year earlier, consumer prices fell 1.6 percent in October, a slower pace of decline than a month earlier when prices fell 2.3 percent year-on-year.
However, a year of rapid inflation in 2008 began cooling off in the final quarter, meaning the September comparison was based on a lower base number.
“Prices for food decreased 0.2 percent, which contributed … to the overall 0.3 percent decrease of consumer prices,” the NIS report said.
An official at the institute who declined to be named said Tuesday that last month’s deflation was due to the rising supply of food on the domestic market. “In October, the government permitted fishermen to catch fish for the fishing season. Furthermore, locals were able to supply meats and produce into the markets, which caused inflation to bottom out,” the official said.
Although food fell overall, Ministry of Commerce data showed that meat and fish prices were largely stable last month. Beef, mud fish, duck, smoked fish and dried fish prices remained the same between October 1 and October 28, the last date before the Water Festival, while pork and bacon were both up 200 riels a kilogram. Chicken fell 200 riels a kilogram.
October’s CPI data follows a prediction by the London-based Economist Intelligence Unit (EIU) in this month’s economic outlook that “consumer prices … will begin to increase again on a year-on-year basis in the final quarter of 2009”.
“We estimate that Cambodia experienced a year of deflation in 2009, with consumer prices falling by an average of 1 percent,” the report said. “In line with global trends, food and fuel prices have fallen from their highs of mid-2008.”
The NIS official forecast that prices would be up slightly for the whole year, based on the basket of 135 goods used to evaluate the Kingdom’s CPI. Inflation soared last year, reaching more than 20 percent at its height in July and August, spurred by the rise in global commodity prices, particularly oil.
The EIU said that it expected consumer prices to increase 5.9 percent in 2010 due to renewed demand-side pressures, higher global commodity prices and stronger GDP growth in Cambodia. It forecast inflation of 5.6 percent for 2011.