Myanmar Spring Chronicle – September 1 View
(Moemaka) September 2, 2024
With rising inflation and skyrocketing commodity prices, the people of Myanmar are constantly grappling with how to survive the financial turmoil
From the moment they wake up to the time they sleep, the issue of how to cope with inflation and the surge in commodity prices is always on their minds. Recent news includes the announcement of electricity meter rate hikes starting from September 1, along with increased bank interest rates. Additionally, gasoline and diesel prices have risen by about 125 to 150 kyats per liter.
The raising of bank interest rates and electricity meter prices officially acknowledges the ongoing inflation and the depreciation of the kyat. The Central Bank sets the official exchange rates for the kyat against the U.S. dollar and other foreign currencies, but the actual rates in the open market differ significantly. The exchange rates for foreign currency earned through exports or sent home by overseas workers through official channels also vary.
If you look at the price of gold in kyat, you’ll find that the official rate set by the Myanmar Gold Entrepreneurs Association is much lower than the real selling price. While the association sets the kyat price at around 3.6 million, the actual market rate is between 6 and 8 million kyat. Gold shops have to adjust their prices to reflect this reality, often setting unnatural prices that stray far from the junta’s guidelines.
Efforts to control market prices are failing because they cannot address the underlying reasons for the kyat’s depreciation. As a result, the cost of fuel, cooking oil, medicine, daily necessities, and transportation is rising uncontrollably.
A key factor in the rising prices is the reduction in the amount of imported cooking oil, as local production has not been enough to meet demand. This shortage has led to much higher prices than what would be expected based on exchange rates alone. The rising price of cooking oil, a daily necessity, severely impacts low-income households.
Meanwhile, 50-tin cooking oil ration books are being distributed according to neighborhoods, reminiscent of the scarcity during the socialist era of 40-50 years ago when imports were restricted. The rising fuel prices are also caused by the Central Bank’s setting of an unrealistic foreign exchange rate, which leads to long queues at fuel stations, with transportation costs increasing as a result. The difficulty in obtaining fuel affects industries like manufacturing, agriculture, and transportation, driving up production costs and overall commodity prices.
Another essential item whose price is soaring is medicine, which is directly linked to people’s health. The junta has restricted import licenses for medicine, requiring companies to use foreign currency earned from exports. This restriction comes at a time when the kyat is rapidly depreciating, causing medicine distributors to hoard supplies, forcing people to buy medicine at exorbitant prices, and increasing fears about life-threatening shortages.
The effects of widespread armed conflict, including disruptions to transportation infrastructure and unregulated taxation at checkpoints, have also had a significant impact on the production and export of goods. Profit margins for local products are shrinking, while the cost of imports continues to rise.
Under these circumstances, the daily survival of the people has become a tremendous burden. Simultaneously, black market activities and blatant corruption have given rise to a small elite class that profits handsomely from the crisis. In major cities like Yangon and Mandalay, bars and clubs remain lively with wealthy patrons, while the broader population suffers in hardship. In some neighborhoods, cars line the streets at night, showing signs of prosperity, but in other regions of the country, people are fleeing war zones, and death and displacement are becoming daily realities.