Thailand
Thailand: Prices set to stabilise as inflation eases
Rising prices of goods and services are expected to stabilise as inflationary pressure has been easing since the peak of headline inflation in the third quarter, according to executives of the Bank of Thailand.
The higher rate of inflation has mainly come from supply shocks which will ease in line with the slowdown in global commodities prices.
Therefore, business operators would face more limits in passing through cost to consumers, while some of them have already increased goods and services prices, the central bank’s assistant governor for monetary policy group Piti Disyatat said at an analysts’ meeting yesterday.
Headline inflation is gradually declining after peaking in the third quarter, while the core inflation rate has been increasing. As a result, business operators have passed through the costs from core inflation to consumers at a level higher than the central bank’s expectations.
Although core inflation, driven by the demand side, has been rising, the increase has not shown any significant signs and it is in line with the gradual economic recovery, Mr Piti said.
The Bank of Thailand has upgraded its assessment of the headline inflation rate in 2022 from 6.2% previously to 6.3%, and from 2.5% to 2.6% in 2023.
The central bank has upgraded its forecast for the core inflation rate in 2022 from 2.2% previously to 2.6%, and from 2% previously to 2.4% for 2023.
The central bank’s survey found that most business operators would either maintain the existing prices of goods and services or increase them by up to 5% for the next three months.
However, business operators in the service sector have a greater opportunity to raise prices compared with those in the manufacturing sector, according to Surach Tanboon, the Bank of Thailand’s senior director of the monetary policy department.
The central bank expects the core inflation rate to peak in the fourth quarter, then gradually fall from next year, he said.
The central bank’s senior director for the economic and policy department Sakkapop Panyanukul said tourism-related businesses have passed through costs to consumers and are awaiting the industry to rebound.
However, tourism has been improving in accordance with the rising volume of foreign tourist arrivals.
The central bank has revised up foreign tourist arrival numbers for 2022 from the previous forecast at 6 million to 9.5 million, and rising to 21 million in 2023.
The improving tourism sector and private consumption will be the key drivers of the country’s economic rebound with GDP growth assessed at 3.3% this year and 3.8% next year.
Source: https://www.bangkokpost.com/business/2416665/prices-set-to-stabilise-as-inflation-eases