Confidence down as prices soar

Thailand's Consumer Confidence Index (CCI) dropped in April for the first time in six months, with spiralling oil prices pushing up the cost of living.

The index dropped from 80.7 points in March to 79.9 points last month.

The University of the Thai Chamber of Commerce survey showed that tumbling confidence was blamed on skyrocketing oil prices and the rising cost of living, while the conflict over constitutional amendments and political-party dismemberment have led to an unstable political situation.

As a result of lower confidence, consumers still believe this is not a suitable time for purchasing new houses or cars or expanding or starting new investment.

Thai consumer confidence increased for five consecutive months from last October, due to the welcome good news of the general election and the easing of political tension.

Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre, predicted a further decline in consumer confidence in the next few months, as oil prices may reach US$135 (Bt4,400) per barrel in the second quarter.

The domestic oil price will remain high at Bt38 to Bt43 a litre, which will directly lead to higher living costs, he said.

In the survey based on 2,242 respondents, consumers were pessimistic about the economic outlook, facing higher expenses on fixed incomes.

Other indexes related to consumer confidence also dropped for the first time in six months. The index on the overall economy decreased from 73.8 points to 73 points last month, while confidence in employment opportunities fell from 73.5 points to 72.7 points and confidence in future income decreased slightly, from 94.6 points to 94 points.

To boost consumer confidence, Thanawat suggested the government raise people's income, closely monitor energy and consumer-goods prices, stimulate mega-projects and inject money into small communities.

Higher oil prices have pushed up the cost of living. Last month, the Consumer Price Index (CPI) rose 6.2 per cent year on year, the highest increase in two years. In the first four months, the CPI was up 5.3 per cent.