An increase in global commodity prices has sparked a hike in basic prices in Burma, with key goods such as oil, gold and rice on the rise.
One bus driver in Rangoon told DVB on Monday that the price of a gallon of diesel had jumped from 3600 kyat ($US4) to 4000 kyat ($US4.50) in the four days since Friday last week, and that it may continue to rise.
Sudden increases in prices of key goods are worryingly indicative that domestic markets are exposed to external pressures. “The diesel price has increased because of the international price: as the international price increases the [Burmese] government allows them to increase the prices at the pumps,” says economist Aung Thu Nyein.
Political unrest in key oil-producing nations in the Middle East and North Africa, notably Libya, Egypt and Bahrain, has sent prices sky rocketing to around $US116 per barrel.
Earlier increased output by Saudi Arabia had eased price-hikes, but fears that the Saudi’s own production would similarly be hampered by protests against that country’s repressive government have caused speculation to fuel hikes even higher.
This has in turn prompted the price of biofuels such as palm oil and other edible oils to increase, as these ‘soft commodities’ are used as a replacement for petroleum. Aung Thu Nyein adds that climactic influences in Malaysia, a large producer of palm oil, had also reduced output there and therefore increased price. The knock-on effect has been felt in Thailand, which is usually an exporter of biofuels but which is set to import an extra 120,000 tonnes of palm oil and rationing sales of cooking oils.
The ramifications of the oil crisis have also spread to Burma’s food pricing, with basic foodstuffs like rice on the rise, while gold prices have also risen sharply from 600,000 kyat ($US680) per 16.4 grams (or ‘tical’) to around 630,000 kyat ($US715) in the last few weeks.
This also reflects a global hike, with the Financial Times reporting on Tuesday that gold prices rose to a record $US1,432 an ounce, a 9.5 percent increase on January prices. When currency becomes unstable, gold is a natural place to invest, leading to an inevitable rise in prices.
The resulting inflation in Burma has not been helped by a new budget that has increased government spending and ushered in rising civil service salaries.
Inflationary worries are also present in other regional nations, with India’s Sensex falling three percent in a single day on Thursday as foreign investors withdrew around $US1.5 billion in 2011, partly on fears that runaway inflation would damage markets there. Similarly, South Korea’s government held an emergency meeting in which, amongst other measures, it promised to stamp out price-rigging.