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But the continued rise in prices has led to a larger issue: the worry that persistent price increases will have a sharply negative impact on economic growth.

The latest Consumer Price Index reading was particularly worrying - a 7.6-per-cent jump was much higher than the 6.5-per-cent most analysts had been expecting.

While it is popular to blame inflation on high oil and food prices (and hope that these prices will somehow ease back), it appears that price pressures are becoming more broad-based than anticipated.

Higher product costs are already starting to lead to higher wages, as well as a second tier effect on prices in the overall economy.

This in turn could become a drag on productivity and growth.

In a simpler market environment, high inflation leads investors to expect higher interest rates, and this may be a positive factor for some currencies.

However, high inflation has now become a negative for currencies, both in Thailand and the region,

It has caused investors to fear the impact of inflation on growth and the ability of monetary policy to cope with the trend.

In fact, influences on the baht over the past month have been overwhelmingly negative.

Besides an inflationary backdrop, there has also been continued weakness in the trade balance, and continued uncertainty from foreign investors.

As a result, the baht's momentum has been on a weakening trend back above the 33 level.

Inflation has also caused a big shift in local interest rates.

Government bond yields have jumped, with a 2-year notes now at around 4.5 per cent from less than 3 per cent in March.

Major local banks have also begun raising their benchmark loan and deposit rates. Both these factors show the market expects the central bank's policy rate to head up soon.