Rate hits 3.39% on higher food prices in January

Commerce sure 'stabilisation' will keep annual rise within projection

The Consumer Price Index (CPI) increased by the highest amount in 10 months in January at 3.39 per cent year on year, because of rising prices of foods, according to the Commerce Ministry.

However, the ministry is confident that this year's annual inflation rate will be within its projection of 2.8-3.4 per cent on long-term stabilisation of goods and fuel prices, while the strength of the baht should lower production costs.

Month on month, the CPI was just 0.16 per cent higher than in December, with food prices improving slightly by 0.08 per cent.

Commerce permanent secretary Vatchari Vimooktayon said the ministry was convinced that inflation this year would be kept under control by the government, despite expected slight rises in the prices of food and some consumer goods.

The ministry is projecting year-on-year inflation in the first quarter at 3.30 per cent.

As a result of stable inflation, the exchange rate should also be stable, and the ministry expects the Bank of Thailand to control the baht's movements efficiently.

The ministry's projection of annual inflation between 2.8 and 3.4 per cent is based on an expected Dubai oil price of US$100-$120 per barrel, the exchange rate at Bt28.5-Bt32.5 per dollar, and continued government subsidies measure to relieve the daily cost of living.

Last month, inflation was up mainly because of higher prices in the food and beverages sector, which rose by 4.3 per cent year on year, while the non by 2.78 per cent.

Core inflation, which excludes the volatile prices of food and fuel, was 1.59 per cent year on year in January, and 0.08 per cent compared with the December figure.

The BOT projects core inflation this year will be in a range of 0.5-3 per cent.

Meanwhile, to increase efficiency of agricultural-goods trading in the futures market, the Agricultural Futures Trading Commission yesterday launched the Giving Ideas on Futures Trading (GIFT) system to provide experience for those wanting to trade in the Agriculture Future Exchange of Thailand (AFET).

Commerce Minister Boonsong Teriyapirom said the government would promote more trading of raw and processed agricultural products in the AFET to ensure stable prices.

Potential products to be traded in the futures exchange include rice, maize, onions, garlic and ethanol.

He said that if more commodities could be traded in the AFET, more contracts would be created. The current average is 5,000 contracts a year.