Thailand: Inflation expected to dip through year

The government expects the inflation rate to continuously decrease throughout this year after the rate in January declined, reaching the lowest level in nine months.

The Commerce Ministry yesterday reported headline inflation, gauged by the consumer price index (CPI), rose by 5.02% year-on-year in January, down from 5.89% year-on-year growth in December 2022 due to the deceleration in energy and food prices.

In December 2022, the country’s inflation rate ranked the 32nd lowest of 129 economies.

It was relatively low compared with many others including the US, the UK, Italy, Mexico and some Asean countries such as Laos, the Philippines and Singapore.

In 2022, Thailand’s annual CPI rose by 6.08% over the year before and was ranked the 33rd lowest among 129 economies.

According to the Commerce Ministry, January’s inflation rate was contributed by a 3.18% year-on-year growth of non-food and alcoholic beverages following energy prices, especially prices of fuel, electricity, liquefied petroleum gas, and public transportation fares (minibuses, taxis and airfares).

Moreover, the cost of construction materials, wages, personal expenses (soap, toothpaste and haircuts), cleaning supplies (dishwashing liquid, softener and detergent) increased.

However, the price of certain items decreased such as electric appliances (TVs, air conditioners and washing machines) clothing, skincare products, face powder, diapers and cable TV membership.

Another contribution was a 7.7% year-on-year growth in food and non-alcoholic beverages, especially increases in the prices of prepared foods (cooked food, noodles, curry and rice, and breakfast), fresh vegetables and fruits (spring onions, eggplants, morning glory, watermelons, tangerines, mangos), rice and eggs.

This stemmed from high production costs and high demand during the festive season and long holidays. However, the prices of pork and some fresh vegetables and fruits (ginger, long beans, chillis, carrots and durians) decreased due to there being a sufficient supply.

Core inflation, which excludes raw food and energy prices, posted a year-on-year rise of 3.04%, slightly lower than the 3.23% growth recorded in December as overall production costs remained high.

For the full year of 2022, core inflation was 2.51%.

“The inflationary pressure for this year is expected to ease except there is the abnormal situation such as the Russia-Ukraine war,” said Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office.

“Key factors that have affected this year’s inflation include high energy prices, including fuel, electricity and cooking gas, and rising food prices due to high production costs, including the cost of ingredients, transportation and wages, together with growing demand from tourism and the government’s stimulus measures.”

Nevertheless, the global economic recession leading to a deceleration of demand and fuel prices and the baht’s appreciation would reduce import costs and limit any expansion of inflation.