According to data released by the Central Statistical Organisation (CSO) for Myanmar, which operates under the Ministry of Planning and Economic Development, Myanmar’s year-on-year inflation reached 7.33pc for the month of August due to high food, gas and electricity prices. The sudden increase comes following low inflation rates averaging 2.8pc in 2012-13.
“It will be important for the authorities to keep a close eye on the situation so that it does not get out of hand,” Daw May Thet Zin, the World Bank’s country economist for Myanmar, said in a press release that accompanied the launch of its new Myanmar Economic Monitor report.
“Rising inflation is always a cause for concern since it hurts the poor disproportionately, but economies do sometimes experience rising inflation, especially when in transition as is the case in Myanmar,” she continued.
The World Bank report shows that higher inflation may begin to weaken the purchasing power of the kyat, while driving down the competitiveness of Myanmar’s exports.
According to CSO data, the price of Myanmar’s staple food, rice, increased 14.46pc from September 2012 to August, while gas and electricity prices grew 9.58pc during the same period. The price for meat, fish and eggs, meanwhile, increased 8.5pc.
Following low inflation in 2012-13, an increase in food prices and housing rental costs sent inflation up to 6pc in December 2012 then dropped to 4.7pc in March before the latest increase.
“The inflation rate has not changed dramatically while some prices are up and some of them are down in CSO, but we could not say right now that the price is stable,” said a Central Bank official, acknowledging that the government should continue to monitor price fluctuations in the market.
“The current rate does not have a big impact on salaries, which have increased while consumption is growing, but on the other hand the government has to effectively manage consumer prices before they get worse,” he said.
One of the tools the government has at its disposal is to release food stocks to the general public in order to offset price increases, something it has already announced it has done in the case of rice stocks in August, when prices were as high as K400,000 per tonne, said U Win Myint, spokesman for Ministry of Commerce. Since then, he said, the price of rice had come down to about K320,000 per ton.
Inflation hit 20-30pc during the 2003 banking crisis, although far short of the 60pc level recorded in the 1990s when the government would print money to keep up with skyrocketing prices.
The Central Bank has said in the past that the weakening of the kyat against the US dollar in the past year has further increased inflation. The dollar now trades for about K973, compared with K850 a year ago, according to the Bank’s website.
However, some experts have contrasted the notion, saying that the US dollar exchange rate against the kyat is still fair and not too low to invite inflation.
“It gives a boost to the competitiveness of Myanmar’s exports and import substitutes, while at the same time making the country a more attractive location for foreign investment,” Sean Turnell, an expert in Myanmar’s economy at Australia’s Macquarie University, told The Myanmar Times last month.
source: The Myanmar Times
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