Thailand holds Inflation at bay for Fourth Straight Month

| Source: Bangkok Post

Inflation slowed for a fourth straight month in April as government measures and subsidies continued to hold down prices and continued baht gains eased energy costs.

Commerce Ministry figures showed consumer prices rising by 2.4% year-on-year last month against 2.7% in March, 3.2% in February, 3.4% in January and 3.6% in December, when the rate was the highest since November 2011.

The ministry has begun using 2011 instead of 2007 as the base year for calculating inflation, with the number of consumer items monitored rising to 450 from 417.

The new items include fresh food, cooked food, natural gas for vehicles, interprovincial vans, security guard payments and nursery costs.

Analysts had expected a consumer price index of 2.5% last month.

Vatchari Vimooktayon, the commerce permanent secretary, said April inflation was due mainly to higher prices for food and non-alcoholic drinks, livestock, eggs, dairy products, fruits and vegetables.

Food and non-alcoholic drinks prices rose by 4.2% year-on-year, with meat, poultry and fish up by 6.2% and eggs and dairy products up by 3.1%. Fruit and vegetable prices surged 13.1%.

On a month-to-month basis, prices rose by 0.2% on higher costs for food, non-alcoholic drinks and fresh produce.

Several areas have suffered from drought, resulting in lower supplies.

Core inflation, which excludes fresh food and fuel costs and is based on 312 products and services, was 1.2% in April, within the central bank’s target range of 0.5% to 3%.

For the first four months of this year, annual inflation was 2.9%, a level the Commerce Ministry says is consistent with expanding consumption.

Mrs Vatchari said inflation in the second quarter is expected to hold steady despite expected price rises for skytrain fares, expressway tolls and liquefied petroleum gas.

For the first three months of this year, inflation stood at 3.1%.

Mrs Vatchari said inflation for the full year is forecast in a range of 2.8% to 3.4% as expected, assuming that Dubai oil remains at $100-120 a barrel, the baht stays within a range of 28.50 to 32.50 to the US dollar and the government holds down product and energy prices via subsidies.

Thanavath Phonvichai, an economist at the University of the Thai Chamber of Commerce, said the easing of inflation in April was in line with the global trend.

“Given the trend, the government needs to determine whether this stems from lower purchasing power,” he said.

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