Sat, October 16, 2021

international

Currency depreciation and skyrocketing prices pose major threat to Myanmar people


YANGON- The steep depreciation of the Myanmar kyat and the rapid rise in inflation—which has led to the skyrocketing prices of items such as basic foods and fuel-- pose a major danger to the well-being of the Myanmar people and Myanmar economy.

Inflation means a general rise in the prices of services and goods in a particular country, resulting in a fall in the value of money.

When the prices of goods and services increase, consumers may consider buying their goods and services to a lesser degree despite using the same currency unit. 

The inflation rate is represented as a percentage increase in prices over a set period of time. The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services.

Inflation rate is a decisive factor for the economic situation of a country. For economic growth, there should be a suitable inflation rate. However, extremely high inflation rate may economically destabilize the global countries in a long-term period.

Inflation rate is measured in various ways such as a long-lasting rise in general prices and high cost of living in a whole country.   

The ongoing kyat depreciation and consumer price hikes in Myanmar are posing a real threat to the daily lives of its people. 

According to the data from the Central Statistics Organization (CSO), inflation rate was 9.06% in January 2020 and it jumped to 9.20% in December. Due to the Covid-19 impact since March 2020, public consumption of goods and services has declined with decreasing CPI. So, inflation rate decreased to 3.87% in December 2020. 

Since then, the SCO has not released any data about Myanmar’s inflation rate and CPI.   

Currently, US dollar exchange rate is record high with around Ks2,000 per dollar, causing a great impact on the grass roots. 

Foreign exchange rate in domestic market has significantly since June 2018. The value of Myanmar kyat per US dollar reached Ks,1,440 on July 30, 2018 that overtook a record high of Ks1,438 on December 16, 2016.  The whole year of 2018 maintained a high dollar exchange rate—Ks1,570 on August 16, Ks1,585 on September 18, Ks1,622 on September 19, and Ks1,650 on September 20. Although dollar exchange rate decreased to Ks1,480 on August 20, it increased again to Ks1,650 on September 20. Then, it fluctuated and reached Ks1,577 on December 12.

In 2019, Myanmar kyat value per US dollar was a maximum of Ks1,565 on September 6 and a minimum of Ks1,297 in October.

In 2021 (this year), the US dollar exchange rate in domestic market was Ks1,331 in January and leaped to Ks2,000 seeing a record high.

The rise and fall of foreign exchange usually results from impacts on supply and demand. Major impacts come from foreign exchange market situation, unbalance between export and import, national economic growth rate, budget situation and prices of goods and services. 

With high dollar value, there will be increasing prices of imported goods especially those in high demand such as fuels, communication equipment, medicines and food, allowing inflation rate to increase as well.

According to the data about food category released by Bayint Naung Wholesale Center in Yangon Region, prices of rice and cooking oil have increased in September this year, but onion price has not increased significantly.

“Previously, prices of rice from Pyapon and Mawgyun were Ks35,000 per bag. Now, the price is about Ks50,000 in Yangon. Pawhsan rice from Myaungmya and Pathein are priced at Ks43,000 to Ks53,000. Rice wholesalers are selling rice now. Their prices are much different from those at local markets,” said a resident in Lanmadaw Township, Yangon. 

On September 17, 2021, a bag of Shwebo Pawhsan rice was worth Ks48,000 to Ks54,000, that of Pathein Pawhsan rice Ks45,000 to Ks48,000 and that of Ehmahta rice Ks24,000 to Ks25,000.

Moreover, there have been changes in prices of seasonal vegetables such as cauliflower, cabbage, carrot, water cress, roselle and tomato. 

“The price of coriander is the highest. A very small bundle of it is about Ks200,” said a housewife.

Most of the commodities have increased in prices, said a grocery owner in Thingangyun Township. 

Another grocery owner from Tamway Township said the prices of imported goods particularly increased citing Myanmar kyat depreciation as the likely reason.

The steep depreciation of Myanmar currency is a great blow to national economy, causing public concern. Review and reconsideration are necessary because it impacts the ordinary public rather than businesses and entrepreneurs. 

Besides, the rich-poor gap must be considered in Myanmar whose minimum wage is the lowest in the ASEAN countries. Unbalance between income and expenditure is the greatest challenge.

Along with much reliance on import, the ongoing dollar and fuel price hikes will greatly impact the people, local businesspeople commented.

Generally, high inflation rate affect poor countries rather than rich countries. It is high time for Myanmar to adopt sound policies that can help reduce inflation rate and CPI. 

In this context, the adoption of such policies also needs to seek the root cause of inflation rate.

The high inflation rate Myanmar is seeing is cause for alarm and a threat to the public. Therefore, it is time for the government and the Central Bank of Myanmar to take action.

 

By Ni Lar/Eleven Media

Published : September 23, 2021