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Thailand: Headline inflation tallies 1.62% in August
The headline inflation rate, as gauged by the increase in the consumer price index (CPI), was 1.62% year-on-year in August, the highest since October 2014, driven by rising prices for energy and fresh food.
The Commerce Ministry reported yesterday consumer prices rose for a 14th straight month in August, mainly driven by higher prices for energy, tobacco and alcoholic drinks; housing and furnishings; rice, flour and cereal products; seasonings and condiments; and non-alcoholic beverages.
Of the 422 product and service items used to gauge inflation, the prices of 226 items such as milled rice, vegetables, eggs and milk products, cigarettes and alcoholic drinks rose last month. No price changes were registered for 84 items, while 112, including pork, vegetable oil and diapers, saw prices drop.
On a monthly basis, prices bounced back to an increase of 0.09% in August from July after contracting by 0.05% and 0.09% in July and June respectively and against a 0.56% increase in May.
Higher prices of fresh food such as rice, fresh vegetable, egg and milk products, seasonings and processed food helped drive the monthly price rise.
For the first eight months, inflation averaged 1.12% over the same period last year, moving in line with the Commerce Ministry’s forecast, said Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office under the Commerce Ministry.
Core CPI, which excludes raw food and energy prices, rose 0.75% year-on-year in August and 0.01% month-to-month from July. For the past eight months, core inflation averaged 0.71%.
“The inflation trend is expected to accelerate in the fourth quarter this year driven by fresh food and oil prices, important factors that affect CPI,” said Ms Pimchanok.
“Global warming, in particular, has resulted in weather phenomena that affect overall farm production,” she said.
Ms Pimchanok said the office forecasts inflation to average 1.5% in the last quarter of this year, leading the full-year rate to stay at 1.2% or in a range of 0.8-1.6% as predicted by the ministry.
The ministry expects the crude oil price to average US$60-70 per barrel, with the exchange rate at 32-34 baht per US dollar, with the country’s economic growth at 4.2-4.7 %.
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce, said higher core inflation in August reflects Thailand ‘s gradual economic recovery.
However, he noted that overall purchasing power remains fragile, as certain key farm prices have yet to increase.
HSBC Global Research reported Thailand’s future inflation trajectory is still largely subject to uncertainties in fresh food and oil prices.
The recent baht appreciation against the dollar (after the market priced in a higher possibility of a policy rate hike in the near term) could also put some downward pressure on import prices, it added.
In particular, it expects headline inflation to ease in the next few months because of the high base last year.
HSBC’s research house said it is still confident that headline inflation will likely average 1.2% y-o-y, checking in within the Bank of Thailand’s 1-4% target range in 2018 after undershooting the target for three years.
Source: https://www.bangkokpost.com/business/news/1533490/headline-inflation-tallies-1-62-in-august