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Published on April 11, 2008

The Daily Cost of Living Index (DCLI) dropped sharply last month, recording an 18-month low of 52.3 points, although Thailand's Consumer Confidence Index (CCI) increased for the fifth consecutive month.

The University of the Thai Chamber of Commerce said the CCI rose to 80.7 points, from 79.5 in February, thanks to the government's economic-stimulus package, in particular the Small, Medium and Large Village Fund scheme.

However, based on a survey of 2,238 respondents, the DCLI had plunged sharply from November 2006, because of increased concern over rising food and consumer-goods prices.

"Consumers have placed a high emphasis on daily living spending, because they're concerned about their present income while facing higher goods prices," said Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre.

However, consumers expect a better situation in the future, with the centre's latest poll showing the DCLI should rise from 68.2 points to 68.8 in the next three months.

Other related confidence indexes also continued to increase, recording the sharpest rises in 12-16 months. Confidence in the overall economy rose from 72.6 points in February to 73.8 points last month.

Confidence in future income improved from 93.2 points in February to 94.6 last month, while the Future Employment Opportunities Index rose from 72.7 points to 73.5.

Despite improving confidence, signs of recovery are still not yet clear, due to greater worries about rising consumer-goods prices, political uncertainty and continuing high oil prices, said Thanawat.

Other negative factors shrinking consumer confidence are the effect of a possible US recession on the world economy and political chaos from attempts to amend the Constitution.

If these factors do not worsen, confidence should show clearer signs of sustainable recovery in the second half of the year, Thanawat added.

Saowanee Thairungroj, vice president of the university's Research Division, said consumers had greater confidence in purchasing more durable goods like houses and cars and dared to spend on new businesses and travelling.

Petchanet Pratruangkrai

The Nation