“Inflation Rate Spikes in May-July”
By Nan Lwin 24 August 2018
YANGON — Myanmar’s inflation rates rose at the fastest pace in recent years during the three months from May to July this year due to the depreciation of the kyat against the US dollar, according to a monthly report by the Myanmar Statistical Information Service (MSIS), a department under the planning and finance ministry.
The MSIS report said year-on-year inflation accelerated to 7.56 percent from 5.90 percent during the three-month period.
The inflation rate for 2017 had been stable throughout, remaining between 3.40 and 4.45 percent. However, the 2018 year-on-year inflation rate increased in May to 5.90 percent, 6.45 percent in June and 7.56 percent in July.
Year-on-Year CPI inflation is computed as the change in the Consumer Price Index (CPI) for a given month compared with the same month of the preceding year in percentage terms.
The report said the inflation rate rose dramatically as a result of the dollar hitting a record high against the depreciating kyat, which affected imported products and also raised fuel and transportation costs. Since May, the value of the kyat has declined substantially.
Between April and May this year, the inflation rate was 0.17 percent, while between May and June it rose to 0.29 percent and from June to July, 0.44 percent.
The core inflation rate, which excludes the cost of food, non-alcoholic beverages and fuels, is also higher compared to last year. May saw an increase of 5.05 percent over the same month last year, 5.64 percent in June and 5.14 percent in July. The core inflation rate stayed within 3.40 and 4.11 percent for the duration of 2017.
The Consumer Price Index (CPI), which measures the average change over time in the price of a basket of consumer goods and services, has also significantly increased.
The CPI is usually calculated by examining prices across eight major consumer categories including food and beverages, housing, clothing, transportation, medical care, recreation, education and communication.
The CPI showed an increase between July and June this year at the following rates: food and non-alcoholic beverages increased by 1.59 percent; tobacco and alcoholic beverages increased by 3.37 percent; furnishings, household equipment and routine household maintenance by 0.58 percent; health by 0.33 percent; transport by 1 percent; recreation and culture by 0.18 percent; education by 0.12 percent and other non-food by 0.50 percent.
The overall CPI index increased by 7.56 percent compared to July 2017. Specifically, prices in the food and non-alcoholic beverages sector increased by 7.59 percent; tobacco and alcoholic beverages by 11.93 percent; clothing by 11.83 percent; furnishings, household equipment and routine household maintenance by 3.81 percent; residence lease and household equipment by 8.16 percent; health by 5.18 percent; transport by 11.75 percent; recreation and culture by 2.02 percent; and education by 6.80 percent.
The MSIS report said rice prices have been higher in 2018 due to floods, which have destroyed paddy fields and roads across the country. Moreover, the exchange rate instability has made fuel costs higher and as a result transportation costs have also risen in the country. MSIS suggested that the government contain the fluctuation of foreign exchange rates in order to reduce inflation rates.
In July 2018, the highest inflation among the 14 states and regions in Myanmar hit Mandalay with a 9.93 percent increase, followed by Rakhine State at 8.87 percent and Irrawaddy Region at 6.22 percent respectively. MSIS did not mention the reason for the differences between the states and regions.