Country Report Cambodia February 2010

Outlook for 2010-11: Inflation

After rising by 25% in 2008, consumer prices fell by an average of 0.7% in 2009-Cambodia's first year of deflation since 2001. A contracting economy, rising unemployment and a fall in global commodity prices put downward pressure on consumer prices. A decline in the supply of US dollars entering the economy as a result of a drop in FDI also led the rate of money supply growth to slow. However, consumer prices began to rise again on a year-on-year basis in the final quarter of 2009, and we expect prices to increase by an average of 4.9% in 2010, in response to renewed demand-side pressures as economic growth begins to recover and global commodity prices edge higher. Inflation will average 5.6% in 2011.

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