I NFLATION took a sharp upward trend in April, the latest monthly report from the
National Bank of Cambodia found.
Prices rose by 3.64 percent in the
month, compared with 1.23 percent in March. Food prices alone rose by nearly 5
percent. Over the first four months of the year inflation nearly reached 8
The report said: "This shows a worrying situation as compared
with the government's policy objective of bringing the annual inflation rate to
10 percent for the year of 1994 as a whole."
The larger increase in April
was attributed to "psychological factors" which lead to rice hoarding and
consequent upward pressure on rice prices.
"The more important factors
which contributed to such a rise were the seasonal demand for consumer goods
during the New Year celebrations and the speculative rise engendered by
political disturbances," the report said.
It was during April the Khmer
Rouge recaptured their headquarters at Pailin from Royal Government forces and
then launched an offensive which threatened Battambang.
The report did
point out that the performance in April was still better than in the
corresponding month last year when prices went up by 15 percent during the
No blame for the rise in inflation was attached to
the increase in money supply, with it increasing by 5.5 percent or 23.2 billion
riel in April as against a 10 percent or 38.7 billion riel increase in March.
The decline in the increase in the money supply was put down to a drop
in the growth rate of foreign currency deposits to 9 percent from 18 percent in
the previous month.
One measure of confidence in the economy found by the
report was a decrease from 50 to 40 percent in the amount of total broad money
held outside the banking system during the first four months of the
Political uncertainties during the month were also blamed for a 1.6
percent softening of the riel against the dollar. The rate hovered around 2,485
to 2,490 riel to the dollar at the beginning and middle of the month and peaked
to 2,520 at the end of April.
Total foreign exchange assets in the
banking system increased by 13 percent, or 60.2 billion riel in April to reach
513.2 billion riel.