Slowing Inflation Fails to Ease Cost-of-Living Burden

Many Cambodians continue to face difficulties financing their livelihoods as the cost of food and other goods remains high, despite forecasts indicating inflation will fall in 2023
Fishing boats on a riverbanks in Phnom Penh. Kiripost/Iea Sonita
Fishing boats on a riverbanks in Phnom Penh. Kiripost/Iea Sonita

Despite forecasts that inflation will fall from 6.2 percent in 2022 to 2.5 percent this year, Cambodians continue to face livelihood difficulties in the first month of 2023 as the cost of goods on the market remains high.

According to the Ministry of Finance’s “Cambodia’s Macroeconomic Situation at a Glance 2022-2023” report, inflation is expected to slow down to about 2.5 percent in 2023 as oil and other commodity prices progressively return to normal.

However, the inflation rate could rise faster than expected due to the prolong of international goods prices, particularly oil prices, caused by supply stock.

Chan Tho, a vendor in front of the Royal Palace, said after Covid-19 earning money remains tough as everything has become more expensive. As she can only earn money to buy food once a day, she hopes food prices will be reduced.

“I want food prices to be less expensive. The food price rises, and even the pork price rises. Everything is expensive,” she said. “So, I want the price to fall so disadvantaged people can afford it.”

“Those who are rich can afford it, but disadvantaged people can only earn and spend it all as the goods are expensive,” she added.

Currently, she makes 50,000 riels a day. However, with expenses, such as her children and daily living costs, she does not have much left over.

She said that the rise in the price of goods has an impact on her as she also rents a house. As the cost of goods grows, she may find herself unable to pay, she added.

“My children are in school, and I don't make much money,” she said. “Everything is on me, but my income is only per day. There isn't much money left. It's only for getting through day-to-day.”

However, she can only sell in front of the Royal Palace since it is the only occupation that allows her to generate income in order to resist inflation. There will be no income if she stays at home, she said.

“So, if I come to sell, I'll be able to survive and still have money to buy food,” she said.

According to Social Protection Cambodia on November 25, the government spent approximately $868,42 million on implementing the cash transfer program for poor and vulnerable households during Covid-19 in the previous 29 months.

This emergency intervention has helped to ease the burden on the lives of poor and vulnerable households who hold equity cards in urban and rural areas across the country.

Chhour Sopanha, director of the Department of Social Welfare under the Ministry of Social Affairs, Veterans and Youth Rehabilitation, said that the government has a cash transfer program to assist those facing inflation.

It has been separated into two groups: those who face a high danger of inflation as a result of the economic crisis, and those who face inflation as a result of flooding, he added.

"There are more than 260,000 families that are now receiving the benefit from the cash transfer system,” he said. “They will get the cash transfer based on the number of family members they have."

He said that people impacted by floods will receive benefits from the scheme three times. In addition, they are already receiving the second cash transfer. The third cash transfer will be completed in February.

"When it finishes, the 99,169 households will become families whom are afflicted by inflation due of the economic crisis. So, they will get cash transfers on April 10 and July 10 again,” he said. “This is a strategy that we will implement.”

The government has spent about $48 million on this cash transfer scheme, with $12 million going to flood-affected households and $36 million going to people affected by the economic crisis, he said.

The cash transfer scheme for flood-affected people will be implemented in 16 provinces, with a focus on 3,235 villages.

Meanwhile, the families affected by the economic crisis will be identified by the Ministry of Planning. Its requirements differ, but include vendors, those who need to support their children, people aged above 65, those who have HIV, people with disabilities, and residents who have children under the age of five.

According to Asian Development Bank (ADB) on September 21, Cambodia was anticipated to have one of the lowest rates of inflation among ASEAN nations this year despite the worldwide rise in gasoline and fertilizer costs.