Amid global economic and political crises affecting economies worldwide, Cambodia’s inflation rate surged to over 3% in August, according to the latest Consumer Price Index (CPI) from the National Bank of Cambodia (NBC).

According to the central bank, inflation for August stood at 3.2%, up from 1.9% in July, largely driven by rising food costs.

Core inflation, which excludes food and oil prices, and inflation excluding oil were 2.6% and 3.6%, respectively.

Breaking down August inflation by major commodity groups: Food and non-alcoholic beverages increased to 4.2% from 3.1% in July; Alcoholic beverages, tobacco and narcotics climbed to 3.3% from 2.4%; Clothing and footwear rose to 4.2% from 3.4%; Utilities such as housing, water, electricity, gas and fuels went up to 1.9% from 0.5%; Furnishing and household maintenance inched up to 1.7% from 1.4%; Health costs went up to 1.6% from 0.9%; Transport costs dipped to 0.2% from 3.2%.

Communication saw a slight increase, hitting 0.4% from 0.2%; Recreation and culture rose to 3.9% from 3.2%; Education remained unchanged at 2%; Restaurant costs surged to 2.9% from 0.5%; and miscellaneous goods and services climbed to 3% from 2.3%.

Hong Vannak, an economist at the Royal Academy of Cambodia (RAC), attributed the rising inflation to various factors.

“Inflation has escalated due to issues like the spread of Covid-19 since late 2019 and the ongoing Russia-Ukraine conflict which has resulted in economic sanctions and disruptions to the global supply chain, placing pressure on the exchange rate,” he told The Post on October 19.

“High inflation, marked by rising commodity prices, adversely affects the national macroeconomic situation. Particularly, it burdens low and fixed-income households as their living costs soar, impacting daily expenses and depleting individual and family savings. When the economy and society are strained, inflation tends to spike,” he explained.

Given the prevailing global uncertainties, he believes predicting future economic growth and inflation trends to be difficult.

Data from the Ministry of Economy and Finance released in June show that Cambodia’s average annual inflation was 1.9% in Q1 2023. This was a drop from 5.9% the previous year and 3.2% in Q4 2022, reflecting how the prolonged Ukraine crisis and geopolitical tensions have dampened global consumer demand and hindered trade growth.

The World Bank’s projections indicate Cambodia’s CPI hovering around 2.5% for both 2023 and 2024.