Monday, April 07, 2008

Inflation part 2

Last October inflation was starting to become an issue, now it’s become a big issue. Below are just a few things I heard or read over the weekend. Apparently prices in 2008 will be 30% higher than in 2007.

*Yesterday I went to an English language Christian church service. On the hand out there was a note encouraging members of the congregation to consider what kind of pay rise they should be giving their staff.

*Also yesterday was a protest in town against the price increases, click here for photos or here to read a Yahoo News article about it.

*Pork sellers are selling less pork; people can’t afford to buy so much food these days. But sellers of charcoal are having a boom because cooking gas is so expensive.

*Many people from all over Cambodia live in Phnom Penh and work in factories. On the front of the Phnom Penh Post this fortnight is an article about how many are going back to the provinces. The cost of living in the city is becoming too great. Rent, food everything is going up so fast. Apparently there might be a $6 a month wage increase, but people say this is still not enough, it doesn’t reflect the magnitude of inflation. (I think the minimum factory workers wage is $50 per month. And it seems people are here so they can earn money to send to their families in the provinces.)

“Cambodia’s annualised rate of food inflation hit 24% last month- the highest in almost a decade, and one of the highest in the region.” (PP Post, Cat Barton, April 4-17 2008)

1 comment:

Anonymous said...

Prices of commodities are rising worldwide because the demand exceeds supply. In the medium to long term the supply hopefully will catch up, but in the short term it's normal for consumers to try and find cheaper substitutes. That is difficult when it involves staple food products and power. Governments can make the problem worse if they create excessive money supply (too much easy credit or simply printing excess money) and then all goods and services increase in price. That's the worst inflation and is a scourge some greedy governmnets put on their citizens especially the poor. The best solution is for the supply to increase, that is why the exporting countries are ceasing their exports. We can pray for a good rice season in Cambodia to ease the burden on the poor. The other thing that happens in severe inflationary times is that people buy in larger quantities and hold their savings in commodities that can be stored safely instead of cash. Another option is to keep ones cash predominantly in a strong international currency relative to other currencies. The A$ is such a currency and has appreciated against the KHR and US$.