Inflation hit an 18-month low in September of 2.7 per cent year on year thanks to declining oil prices and low food costs, the Commerce Ministry said yesterday.

Month-on-month inflation also dropped, by 0.3 percentage points from August.

The Consumer Price Index rose 5.2 per cent year on year for the first nine months of 2006.

The reduced inflation numbers prompted the ministry to re-estimate annual inflation for 2006 at between 4.5 and 5 per cent.

Commerce Ministry permanent secretary Karun Kittisataporn said the inflation rate should fall slightly further in the remaining months and the ministry was confident the annual numbers would be under control.

Fuel prices have been the main inflation trigger this year, accounting for 0.9 per cent of the total index, said Karun. As the oil price decreased several times in September it helped lower the Consumer Price Index.

The price of diesel fell seven times last month by about Bt3 overall, and the price of petrol decreased six times by a combined Bt2.50. These lower fuel prices resulted in a 1.1-per-cent price drop in the non-food and beverage sector.

Karun said his only concern at present was the price of fresh produce and the risk of natural disaster, which is beyond the ministry's control.

Fresh fruit and vegetables increased by 6.5 per cent and 2.3 per cent, respectively, compared with last September.

Overall food and drink prices increased by 1 per cent last month, while the price of vegetables and sticky rice also increased. The cost of other fresh foods such as pork, eggs and chicken decreased.

Meanwhile, core inflation increased 1.9 per cent year on year last month and was up 0.1 per cent on August figures. Core inflation in the first nine months was up 2.5 per cent on the same period last year.

The ministry also reported that the Production Costs Index increased by 2.8 per cent year on year last month, but fell 1.8 per cent from August. On average, the index increased by 8.4 per cent, mainly due to rising oil prices.

Petchanet Pratruangkrai

The Nation