Inflation rises 14th month in a row

Economy September 04, 2018 01:00


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THAILAND’S headline inflation, as gauged by the increase in the consumer price index (CPI), accelerated for the 14th straight month in August from rising prices of fresh food and energy, according to the Ministry of Commerce.

The CPI rose 1.62 per cent to 102.27 last month from 102 in July, said Pimchanok Vonkorpon, director-general of the ministry’s Trade Policy and Strategy Office. Headline inflation hit 1.46 per cent in July after easing to 1.38 per cent a month earlier.

Pimchanok cited a 0.31 per cent rise in fresh food prices after two months of contraction, and energy prices’ advance for a 21st straight monthly rise of 9.05 per cent in August, for increase in CPI. 

Of the 422 products and service items used for gauging inflation, the prices of 226 items such as milled rice, baked products, cabbage, Chinese cabbage, electricity and liquefied petroleum gas rose last month. No price changes were recorded for 84 items. About 112 items including fresh fruit and meat saw a drop in prices.

Food prices including non-alcoholic beverages, which make up 36 per cent of the consumer inflation basket, edged higher by an annual 0.77 per cent – led by rice, flour and cereal products, fresh vegetables, eggs and dairy products, seasonings and condiments and non-alcoholic drinks.

Prices of transport and communication, which make up about 24 per cent, climbed 3.86 per cent while fuel prices jumped 12.03 per cent.

Core inflation, which strips out volatile items such as fresh food and energy, was 0.75 per cent, compared with 0.79 per cent in July.

On an eight-month average, headline inflation was 1.12 per cent and core inflation was 0.71 per cent.

The country’s producer prices rose for the fourth straight month in August, inching up 1.8 per cent from the same period last year, following the expansion of agricultural produces. Manufacturing product prices went up 1.6 per cent and construction material prices jagged up 3.3 per cent for a 14th straight month in August.

Prices of steel and steel products rose 9.1 per cent, reflecting an adjustment in production costs.

Pimchanok said that August inflation came not only from the demand side with higher energy prices, but also the effect of costs among some agricultural and non-agricultural products.

The rise in August inflation, the sixth monthly increase in a row, came within expectation from higher prices of energy and the price adjustment of some agricultural products, she said.

The overall indicators reflected that both public and private consumption and spending were at satisfactory levels, while employment, government revenue collection, manufacturing and money circulation continued to facilitate consumption, she said.

Higher energy prices and the volatile baht, as well as the fact that wage increases generally lag behind inflation, have had an impact on some products. But private-sector demand will likely be stabilised by the government’s accelerated budget disbursement for the mega-projects, as well as recoveries in the global and Thai economies, she said.

“[Headline] inflation is expected to reach 1.5 per cent in the fourth quarter of this year. Food prices will mainly affect the inflation rate. Tobacco and alcoholic beverages will have no impact as well as oil prices,” she said.

She expressed confidence that the annual headline inflation rate will stay within the framework at no more than 1.2 per cent for the whole year. Thai exports are forecast to grow 8.5-9 per cent this year.

In regard to the rising prices of steel sheets used for making cans, the Department of Internal Trade has accepted a request for a price increase from a producer. The department has yet to make a decision.