T HE government's plan to contain inflation to ten percent this year appears to
be working, although inflation is still running slightly above the goal,
according to recently released statistics by the National Bank.
The main
threat to inflationary control is the continuing price instability of rice due
to shortages in many areas of Cambodia.
Cheaper Vietnamese rice was
mitigating the effects but "at the end of May there seems to be a firming in the
price," according to a government researcher.
Some of the increase was
thought to be a seasonal increase in the price of rice, which normally occurs
between June and October.
The Consumer Price Index was running at a
yearly rate of 11.5 percent in February and March, dropping to 7.1 percent in
April.
The rate has been brought down from about 26 percent for 1994 in
December. A Ministry of Finance estimate has suggested that if it were not for
an explosive increase in rice prices in the fourth quarter of last year,
inflation for 1994 would have been 7.2 percent.
The inflation
stabilization effort has been progressing since the second half of 1993. In
March 1993, the annual rate of inflation was measured at 340
percent.
There was a substantial drop in the CPI index in February of
negative 5.1 percent. The CPI in March was 1.2 percent and in April it was
negative 0.5 percent.
The index is based on a survey of goods and
services from three markets in Phnom Penh, Psar Thmey, O Russey and Chabar
Ampeou.
According to the report, the sudden appreciation of the riel in
March by 9.2 percent affected import prices, particularly for Thai textiles. The
clothing index registered a monthly drop of 6.4 percent in March.
The
riel jumped in value from 2,611 at the end of February to reach 2,280 riels on
the dollar on March 31. The appreciation began with the introduction of new
higher denominations. Since then the riel has stabilized at about
2,350.
The appreciation of the riel also had a large impact on the
evaluation of net foreign assets. Net foreign assets of the banking system
decreased by 38.3 billion riels or 9.5 percent in March
But the overall
money supply declined by 15.9 billion riels, or 3.5 percent in March, after a
rise of 4.6 percent in February. The slight fall was attributed to a decline in
checking accounts and riels held outside banks. The money supply figure, however
doesn't include the dollars in circulation; only riels.
Credit expansion
as measured by commercial loans to the private sector, declined slightly in
March after having increased steadily since December. The commercial loans in
March were measured at 261.7 billion riels, compared 276.2 billion riels in
February.
