Inflation in Jan hits 6-month high, driven by food, fuel prices

Economy February 04, 2014 00:00

By Petchanet Pratruangkrai

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Commerce sets annual rate at 2-2.8% amid weakening consumption

Inflation edged up last month by only 1.93 per cent year on year, but still hit a six-month high due to rising food and fuel prices. 
The economic slowdown has restrained consumer demand, so the Commerce Ministry has set a low inflation target of 2-2.8 per cent for this year.
Deputy permanent secretary Urawee Ngowroongrueng said yesterday that inflation would be low as most prices were expected to remain unchanged, while the economy has shown a slower expansion rate due to the impacts of the political conflict and global growth.
The inflation projection assumes Dubai crude oil will average US$95-$115 per barrel, the baht will range between 29 and 34 to the US dollar and the government will extend measures ameliorating the cost of living and freeze of the diesel-fuel price.
Inflation is expected to average 2 per cent this quarter, but could rise by 0.5-1 percentage point if the new government cancels some fuel and cost-of-living subsidies.
In January, inflation increased 0.42 per cent from December, driven by rising food and fuel prices.
Year on year, food and beverages rose 3.62 per cent last month on high demand for some foods to celebrate the Chinese New Year, while non-food-and-beverage prices increased 1.07 per cent, mainly from fuel hikes.
Electricity bills increased by 1.45 per cent, cooking gas by 2.27 per cent and petrol by 1.48 per cent.
Among the 450 goods and services in the ministry’s inflation basket, the prices of 202 items increased against decreases in 58 items. The rest were unchanged. 
Core inflation, which excludes volatile food and fuel prices, firmed slightly by 1.04 per cent year on year and by 0.21 per cent month on month.
The Bank of Thailand is maintaining its 2014 forecast for core inflation at 0.5-3 per cent.