Friday, 28 January 2011
Steve Finch
The Phnom Penh Post
Cambodia's consumer Price Index inflation last year stood at a satisfactory 4 percent, below an economic growth rate of more than 5 percent and well within the bounds of acceptability.
In 2011, however, inflationary pressures will rise leaving the Kingdom in a familiar Catch-22 scenario: Although almost all key indicators including GDP growth and bank lending will likely move in the right direction, in turn this will only fuel inflation.
The Cambodian government has increasingly used fiscal measures such as new taxes and tax enforcement along with a sober budget to help prevent runaway price rises. But with few monetary options at its disposal due to persistently high dollarisation, the state still lacks the most useful tool to control rising prices – interest rates.
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