About one million government-employed workers-from junta chief Snr-Gen Than Shwe right down to the country’s road sweepers-received up to 1,000 percent increases in their pay packets today, sparking fears of a new boost to Burma’s inflationary spiral.

When the much-anticipated salary increases of between 500 and 1,000 percent were announced in late March commodity prices leapt upwards, and the kyat fell to another all-time low of 1,450 to the US dollar. Although the private sector seemed to panic as the higher salaries were being paid, analysts believe the real effects of the move will not be felt for two to three months when the extra money has filtered through Burma’s economy.

The government, meanwhile, has warned the private sector not to profiteer from the situation. The state-controlled New Light of Myanmar accused gold traders of “greed” and accused them of responsibility for high gold prices which reached 450,000 kyat (US $310) a tical (0.525 troy ounces) on the day the revised salaries were paid. Shopkeepers were warned that unjustified price rises could lead to their licenses being withdrawn, The Myanmar Times reported.

In the month since the salary increases were announced the prices of such commodities as rice, cooking oil and other foodstuffs have increased 10-20 percent.

Traders along Burma’s borders say business has dropped considerably since the salary hikes were first announced.

Burmese economists believe the government would need about 100 billion kyat ($71,500,000) to implement the wage hike. “It definitely exacerbates the country’s already high inflation,” Sein Htay, Bangkok-based Burmese economist, told The Irrawaddy.

According to the latest report of the Manila-based Asian Development Bank, the government’s eightfold increase in fuel prices last month and a 68 percent rise in tax revenues has prompted higher prices for basic commodities.

Said Sein Htay: “Burmese generals always say Burma’s economy is based on a free market system. But the reality is that Burma runs a command economy.”