August 3, 2011

Petrol prices squeeze domestic consumers


A woman sells petrol on the roadside in downtown Phnom Penh.
Soaring prices for gasoline and goods have hurt some Cambodian consumers, causing what economists have said was a drop in the living standard of the Kingdom’s lower-income population.

“People need to spend more money to make ends meet if prices keep increasing,” said economist Chan Sophal.

The rising costs of gasoline and other goods are weighing on low-income Cambodians, subtracting from their ability to buy the products they need, he said.

Gasoline traded at 5,300 riel per litre in Phnom Penh yesterday, an increase of about  12 percent so far this year, according to the Commerce Ministry’s daily statistics. Oil prices have increased globally, with Brent Crude trading at US$116.35 a barrel on the London-based ICE exchange yesterday, from less than $80 a year ago.

Thorn Sarum, 18, a security guard working in Phnom Penh, said he has struggled with those issues since arriving in the city two months ago.

“I earn $90 per month, but I have never sent my salary to my parents back home because everything here is really expensive. I need to pay for rent, water and some food,” he said.

Others in Phnom Penh are trying to stretch their wages in order to support their families here.

Chhay Samrithy, a 42-year-old primary school teacher at Chak Angrey Phum 3, said she earns 340,000 riel a month, or about $85, which isn’t enough to meet her family’s needs.

“I have five children whose studies I spend a lot of money on, and everything is more and more expensive, especially the price of rice, food and gasoline. That makes my family face many challenges,” she said.

Businesses have also felt the effects of inflation.

Thol Sokny, a gasoline vendor in Kampong Cham’s Memot district, said the pressure on consumers from higher costs has resulted in declining customer traffic. As a result, she is now considering a salaried job instead.

“I want to quit my business to work as a staff for one company because being a seller cannot improve my family conditions,” she said.

Still, increased prices for some goods benefit Cambodia’s producers, particularly farmers.

Ministry of Economy and Finance Secretary of State Hang Chuon Naron pointed out that rising prices for agricultural products such as rice benefits farmers.

He added the government was taking steps to encourage farmers to plant in-demand crops such as palm oil, and was investing in electricity production to decrease costs.

The National Bank of Cambodia is considering a measure to rein in inflation by increasing reserve requirements for domestic banks.

NBC Director General and Spokeswoman Nguon Sokha has said inflation could hit up to 9 percent this year.

Experts at the Asian Development Bank have said inflation ought to hit about 5.5 percent this year, while the International Monetary Fund estimates Cambodia’s average inflation will be about 6.5 percent this year.

In July, Minister of Economy and Finance Keat Chhon raised Cambodia’s inflation target to 5.5 percent for 2011, from a 5 percent target set previously for the year.

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