Policy rate hike expected
Inflation accelerated in August to the fastest pace since 2008, fuelling expectations on another rate hike of 25 basis points in the third quarter of this year, according to Siam Commercial Bank's Economic Intelligent Centre.
An index of consumer prices climbed 4.29 per cent in August from a year earlier, compared to 4.08 per cent in July on higher food prices.
Core inflation, which excludes fresh food and fuel prices, accelerated to 2.85 per cent in August from 2.59 per cent in the prior month. The central bank has raised the policy rate on August 24 for the seventh consecutive time since the rate pause in October of last year to 3.50 per cent.
SCB EIC expects headline inflation to ease 0.5-1 per centage point to 3-3.5 per cent year-on-year in September as the government's policy lowers petrol and diesel prices.
However, core inflation is likely to remain high as manufacturers' overall costs are not expected to decline sharply, the research house said. Though lower retail oil prices will reduce cost of logistics, labour cost tends to rise which could further pressure core inflation in the period, it said.
