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Inflation

June inflation down slightly

The Consumer Price Index is expected to firm up slightly in the remaining months, mainly from rising fuel prices and falling value of the baht, reflecting strong economic growth and ensuring the full-year inflation rate will be no higher than 2.8 per cent, the Commerce Ministry says.

"Inflation is projected at 2.4 per cent this year. Low inflation reflects the fact that consumers have not faced a high cost of living, while a slight increase shows consumers have confidence to spend money amid the economic recovery," Amparwon Pichalai, adviser to the ministry, said yesterday.

Inflation in June declined for the first time in 10 months by 0.10 percentage point from May. Year-on-year inflation was 2.35 per cent, compared with 2.62 per cent in May, the ministry reported.

First-half inflation was 2.23 per cent year on year.

Inflation subsided last month thanks to the military government's steps to control the cost of living, mainly for consumer goods, and energy prices.

The price of diesel fuel was down by 14 satang from Bt29.99 per litre. Manufacturers of consumer necessities also agreed to hold retail prices until November.

Last month, from the ministry's inflation basket of 450 items, the prices of 175 products increased, 191 remained unchanged and 84 decreased from the previous month.

Food and beverage prices were down by 0.31 per cent, as the country entered the rainy season and more vegetables and fruits were produced. Non-food and beverage prices edged up by 0.01 per cent from May.

The ministry projects that inflation in the second half will stay at 2.53 per cent, in the third quarter at 2.5 per cent and in the fourth quarter at 2.56 per cent.

Thailand's inflation is quite low within Asean, where the averages range from 3 to 5 per cent.

Global fuel prices will be on an uptrend in the remaining months, pushing inflation up slightly, the ministry says. Dubai oil is projected at US$110-$115 per barrel in the second half, up from June's average of $107.92.

Last month, core inflation, which excludes volatile food and fuel prices, was 1.71 per cent year on year and only 0.05 per cent month on month. Core inflation in the first half of the year was 1.45 per cent year on year, well within the Bank of Thailand's target range of 0.5-3 per cent.


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