The ministry's forecast is based on Dubai oil prices at US$55-$60 (Bt1,900-Bt2,073) per barrel and average domestic oil prices of Bt23-Bt26 per litre. However, the domestic price for octane-95 petrol has increased to Bt30.39 per litre, while benzene was quoted at B25.34 yesterday. The ministry will be closely monitoring the effect of rising oil prices to assess whether it needs to adjust its inflation forecast in the second half of the year.

A senior Commerce Ministry official said that although there were concerns about rising oil prices, they would not push the inflation rate to a record high this year.

An increase in oil prices has direct and indirect effects in contributing to rising inflation. The ministry said that every one-per-cent rise in the oil price affected the inflation growth rate by 0.08 per cent.

The official said the inflation figure was likely to be slightly higher this month, as parents would have paid school fees for the new term.

Year-on-year inflation in April was 1.8 per cent. It was recorded at a combined 2.3 per cent in the first four months of the year.

The ministry is confident that the consumer price index will not exceed its projection.

Rising oil prices will not affect the retail prices of some goods during the rest of the year, the official said.

Early this month, the ministry allowed increases in the price of some consumer goods, such as milk and dairy products, fertiliser and fish sauce.

Nevertheless, high competition in the retail business will keep consumer-goods prices under control, the source added.

Under the ministry's price-control measures covering 331 consumer goods, 50 per cent of prices have remained unchanged due to intense competition.

Petchanet Pratruangkrai

The Nation