Rice and gold prices in Burma double

Oct 8, 2009 (DVB), The price of gold in Burma has more than doubled in the past four years, while rice and fish prices have also seen a huge rise, government figures for October report.

Figures released by the government's Central Statistical Organisation (CSO) follow in the wake of the introduction of Burma's largest currency denomination, the 5,000 kyat banknote, on 1 October.

The circulation of the new banknote has sparked fears that inflation rates in Burma would soar, although so far there is no evidence directly linking inflation to the new note.

Figures from CSO show that rice prices have more than doubled since 2005, while gold has risen from 286,660 kyat ($US286.60) per kyatha (16.3 grams) in 2005 to 596500 kyat ($US596.50) per kyatha as of October this year. The average price of fish has also doubled in this period.

Burmese economist Khin Maung Nyo said that the reason for the rise in the price of gold is due to people's distrust of Burmese banks.

"Because there is no reliable banking system in Burma, people tend to stock up gold to preserve their wealth," he said.

"They prefer gold than other properties such as land or a car because gold is easier to trade. It is also because people believe the value of gold is invulnerable to inflation."

His comments were echoed by Sean Turnell, from the Australia-based Burma Economic Watch, who said that the move to gold and other currencies "shows a broader fear, and a lack of financial institutions".

A major worry, he said, is the total collapse of the purchasing power of the kyat, "along the lines Zimbabwe situation".

"Whenever the inflation rate just bubbles along at a rate of 20 percent, which is bad, it is 10 times what it is in neighboring countries."

Mineral and rice exports are a major source of income for the Burmese economy, despite its agriculture sector being severely damaged by cyclone Nargis last year.

The Asian Development Bank (ADB) has warned that it could take up to three years before the economy recovers from the cyclone Official Burmese government figures put Gross Domestic Product (GDP) growth at around 10 percent, although ADB believes the real figure to be half of this.

Reporting by Aye Nai and Matthew Cunningham

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