• 
• 

 "May inflation should be higher due to the spike in oil prices, which show no sign of sliding," said a senior trade official last week.

The domestic price of oil increased eight times from May 1 to May 27, with diesel up significantly - by Bt4.20 per litre from Bt33.44 to Bt37.64 - within the month. The price of petrol also increased by Bt3 per litre during the same period. Other factors pushing inflation higher last month were the increase in public bus fares by as much as Bt1.50.

The ministry may need to again revise its annual inflation target, from between 5 per cent and 5.5 per cent at present. The new rate will reflect an average ammual Dubai oil price of between US$100 (Bt3,250) and $105 per barrel, up from the original target of $85 per barrel; and the exchange rate at between Bt31 and Bt32 against the dollar from Bt33 to Bt33.50.

Dubai crude has surged beyond $130 while the baht is weakening to Bt32.50, which makes oil more costly. That will have a negative impact on food and non-food items, the source said.

"The ministry may need to revise the annual inflation target yet again," the source said. However, he was optimistic that the oil price would fall in the fourth quarter.

The ministry's inflation calculation is based on 373 items of food and consumer goods. The highest weight for inflation statistics is given to rental fees, followed by fuel prices and fresh foods.

A UOB Kay Hian report said earlier that May inflation could spike to 9 per cent. Though not that pessimistic, Thanomsri Fongarunrung, senior economist at Phatra Securities, said inflation for May should hit 6.6 per cent. Usara Wilaipich, senior economist at Standard Chartered, said there was a risk that inflation would be seen to have risen to 7 per cent in May.