In the second quarter of 2022 (Q2 2022), inflation is expected to rise to 7.4 percent, compared with 2.8 percent in the same period last year, according to data from the Ministry of Economy and Finance.
The Ministry’s bulletin of economic financial data for Q2 2022, revealed the inflation rate in Q2 2022 will be the highest in the last seven years, due to an increase in gasoline prices and rising commodity prices following repeated global crises, despite Cambodia maintaining a stable exchange rate.
The Cambodian economy is anticipated to increase by 5.4 percent in 2022 due to strong demand in Cambodia's markets, enhanced commercial activity and local manufacturing supply chains, despite the indirect impact of the war in Ukraine.
"The global economy has been growing steadily and is expected to grow by 3.2 percent by 2022, with most countries pushing for economic recovery policies, accelerating vaccinations to build strong community immunity and live in a new path,” the Ministry said.
Global economic growth was slower than expected in April due to slower growth in China, the United States, and India, tightening global monetary policy, the extension of the war in Ukraine, and the emergence of Covid-19 disease transformation, which disrupts and destroys the economy's supply chain while raising inflation, and fuel, food and other commodity prices.
In Q2 2022, Cambodia's economic situation has been improving through the increase of international tourists, industrial investment projects and the continued growth of domestic production. Exports continue to grow well, including garments and non-garment products, such as bicycles, wires and wiring harnesses, electronic components, car parts and some other products.
The Ministry of Economy also showed the price index of major commodities in the international market, including crude oil price of $110,199 per barrel, an increase of 64.2 percent, and rubber (TSR20) price of $1,652.10 per ton, down three percent, gold at $2,056.01 an ounce up 3.3 percent, and rice at $446.33 a ton, down 7.9 percent compared to the same period in 2021.
According to the Ministry of Economy and Finance, pork prices grew 5.9 percent, gas prices rose 27.9 percent, regular gasoline prices increased by 48.5 percent, and goods and services grew by 4.9 percent in Q2 2022. The exchange rate in Q2 2022 averaged about 4,065.1 riel per $1, down 0.2 percent.
Vorn Pao, Director of IDEA, said that according to the Ministry, all items are growing in price, affecting people's income, which is not balanced with the cost of living, and people are struggling.
“It is estimated that all items are increasing in price as a result of rising inflation. In particular, the cost of goods supplied on the market. There is not enough balance between the income and the cost of living, and the situations of our people are difficult," Pao said.
He added that the issue is that less earnings, coupled with rising commodity costs mean people do not have much to spend on products as previously and spending is limited. Due to rising inflation, sellers are not as profitable.
“Low earnings have the greatest impact on the informal sector and the national economy,” Pao told Kiripost.
“The government did not forsake their own citizens and facilitated a press order to assist poor people urging them to register in the villages to transfer money from the government to meet the risk of inflation. So far, it does not appear to be extensive,” Pao said during a phone call with Kiripost.
Pao noted that the government should provide prompt financial transfers, spread information widely to local villages, operate without prejudice or corruption, and examine those who are vulnerable as they face Covid-19 and real rising inflation.
The government should also take action and assist those deemed vulnerable, and if inflation is excessive and vendors have no more venues to sell from, he requested that the government establish an informal commercial venue.
“Vendors already faced the Covid-19 pandemic and now rising inflation, I request the government set up places for informal businesses to properly sell. If they don’t do it, it will make them worse.” Pao said.