Inflation falls but may jump next year

Thailand's inflation rate fell for a second consecutive month, to 6 per cent in September, due mainly to the unrealistic reduction in prices following the government's six measures to lower the cost burden on consumers, the Commerce Ministry said yesterday.

Despite the improved year-on-year rate, it is concerned that inflation will increase sharply next year after the measures end on January 31.

The Consumer Price Index (CPI) showed inflation at 6 per cent year on year last month, while prices increased by 0.2 per cent from August, showing that people had not decreased their spending despite the higher prices of goods.

The declining inflation trend has prompted the ministry to maintain its full-year inflation prediction of 6.5-6.9 per cent this year, based on an average oil price of US$100 (Bt3,400) to $105 per barrel and an exchange rate of Bt32 to Bt33 to the dollar.

Inflation was 6.5 per cent year on year over the first three quarters of the year. The average oil price during the period was $96.01 per barrel.

Siripol Yodmuangcharoen, permanent secretary to the ministry, said the ministry is confident that inflation will be kept within the targeted range.

"Although the fluctuating global oil price and weak exchange rates have the potential to push up inflation during the rest of the year, the ministry should be able to curb inflation at the targeted level. This could be done with a strong attempt to control consumer goods prices and through lower agricultural goods prices on entering the harvest season," he said.