The consumer price index (CPI) is expected to increase steadily by an average of 3.4 per cent during the remaining months of the year amid higher agricultural product prices and rising interest rates, following a continuous rise in prices over the past 11 months. Oil prices are expected to remain stable in the period.
The Commerce Ministry reported yesterday that inflation came in at 3.3 per cent year on year last month, due mainly to increases in fresh-food prices.
"Inflation should grow steadily in line with economic expansion. Although some goods manufacturers may increase their retail prices, most producers will not increase prices significantly as the economy is only just beginning to pick up steam," said Yanyong Phuangrach, permanent secretary to the ministry.
He said the recent rise in interest rates could slightly reduce consumer spending power. Despite higher rates, enterprises will not immediately increase retail prices following an extension of consumer-goods price controls and concern over lower consumer spending.
The ministry is confident that |the annual inflation rate will come in at between 3 and 3.5 per cent |this year. There should therefore |be solid economic growth given |the government's policies to closely monitor goods prices, its measures to relieve the burden on consumers, plus strong export expansion and domestic consumption, he added.
The CPI rose by 3.4 per cent in the first eight months of the year. Last month, the index rose by just 0.23 per cent compared to July.
In the food and beverages sector, prices increased by 7.5 per cent year on year in August, due mainly to a 22-per-cent rise in the cost of fresh vegetables, rice, flour, poultry and dairy products.
HIGHER PRICES
In the non-food and beverages sector, prices increased by 1 per cent, mainly due to fuel prices rising by 0.5 per cent.
According to an Internal Trade Department survey, 134 products or 32.13 per cent of products in the inflation basket had higher retail prices last month, while 98 products or 23.5 per cent had lower prices. The remaining 185 products in the basket were unchanged.
Yanyong said the ministry would carefully weigh the list of essential products in the ministry's inflation calculation following comments by economic ministers, in order to ensure fairness and the most efficient reflection of consumer goods prices.
The ministry will conduct a workshop with agencies, including the Bank of Thailand, the Thai Chamber of Commerce and the National Economic and Social Development Board, on September 20 to ensure the appropriateness of products in the inflation calculation.
Last month, core inflation, which excludes volatile food and energy prices, came in at 1.2 per cent year on year, and increased 0.01 per cent from the July level. Core inflation was posted at 0.8 per cent for the first eight months of the year.