Inflation

Rising Inflation Rates Destroy Cambodian Livelihoods

Struggling Cambodians share with Kiripost how their livelihoods and spending power have been devastated by inflation, which sits at a 13-year high, the impact of Covid-19 and crippling debts.
A vendor sells vegetables in Phnom Penh. Kiripost/Iea Sonita
A vendor sells vegetables in Phnom Penh. Kiripost/Iea Sonita

Say Thandun’s life has been burdened by financial difficulties in the past three years. The 32-year-old bank staff’s living standard is plummeting as inflation hits a 13-year high.

Thandun has cut down on any unnecessary spending by half, as his outgoings far outweighed his income.

His wife stopped working when she had a baby in 2020 and now he can only afford to spend about 50,000 riels per day ($12.50), down from 100,000 riels ($25).

“Before I could live easily but when it (Covid) came, living started to be bad. I think it doesn't only affect me but most people are facing this situation,” Thandun said in a recent Zoom interview.

“It comes down from being a person who used to spend more on social materials to now a stingy person who is stingy,” he added without any hint of a joke.

Inflation in May hit 7.2 percent, up from 3 percent during the same period last year. This marks a 13-year high as rising inflationary pressures pose serious policy challenges for Cambodian authorities, World Bank said in its latest report.

Rising food and energy prices have also eroded household purchasing power, said the bank. It added that international oil price increases are passing directly through to domestic prices. Increases in fertilizer and food prices further stoke inflationary pressures.

“Vulnerable and poor households in Cambodia are bearing the brunt of these increases, with limited recourse to savings,” the World Bank said.

Therefore, the World Bank added, the government cash transfer program will continue to be needed. As of February 2022, the program covered 690,000 households (2.7 million individuals) or approximately 19 percent of the kingdom’s households.

Since its launch in June 2020, the program has disbursed $593 million, thus far helping to mitigate the negative impacts for poor and vulnerable households.

The World Bank said that additional budgetary spending may be needed to mitigate the impacts of commodity price movements, particularly on vulnerable households and firms.

Reduced revenue collections are expected due to the negative growth impacts of high inflation and dampened aggregate demand, the World Bank added.

Public investment project cost overruns are likely amid surging inflation, and rising costs of inputs such as building materials, labor, and machinery, the World Bank said.

Thandum’s life is an example of livelihoods that have been affected by inflation, in addition to Covid-19. He has been forced to halt plans to build a house due to lack of funds. Instead, in mid-2020, he returned to live with his mother and sold his Prius to settle debt.

“Everything we had paid for and bought before is now double in price,” he said.

Ly Phana is a deliveryman. Inflation has also forced him to slash his spending and stop buying unnecessary material goods. He has even started to cut down on his water, air conditioning and electricity consumption. In addition, he now eats food cooked at home instead of eating out.

“I am a man, I don’t think it is necessary to buy more clothes. I just wear the same ones. I can save money to buy anything that is more useful than clothes,” Phana said.

“I don't eat out anymore, I get it from my house. I want to eat out when my family wants but we hardly go out. We only go twice per month, it's not like before,” he added.

He said his family is in debt and nowadays he tries to find money to help his mother pay for daily life.

“We are in debt, 80 percent of my monthly salary goes on paying back debt and 20 percent for daily life,” he said.