Fuel price policy unlikely to ease cost of living
The government's fuel price reduction policy will not yield its desired effect of easing the cost of living as far as consumption is concerned, as manufacturing now relies less on energy, leaving the prices of essential goods largely unchanged, a Commerce
A study of production costs found that the retail prices of 73 consumer goods will fall after diesel price was lowered by Bt3 per litre.
Steel will drop by Bt30.50 per tonne, paper by Bt9.50 a tonne, TVs by Bt7.75 per unit, refrigerators by Bt5.25 per unit and rubber tyres by Bt1 per wheel.
The Yingluck government will not curb inflation even though it hopes to see inflation improve this month.
Inflation is expected to cool next quarter as the government has launched measures to cut fuel prices domestically, Yanyong Phuangrach permanent secretary of the Commerce Ministry, said yesterday.
The annual inflation target should be met, he said.
"Inflation is projected to reduce slowly to only 3.8-3.9 per cent in September, and average 3.6 per cent in the fourth quarter," he said.
Headline inflation in the first eight months was 3.72 per cent, slightly above the ministry's target of 3.7 per cent for the whole year. Month-on-month inflation rose 0.43 per cent.
The Commerce Ministry reported yesterday that the Consumer Price Index jumped last month to 4.29 per cent year-on-year, the highest rate in almost three years since September 2008, driven mainly by skyrocketing food and fuel prices.
The food and beverage price index surged 8.43 per cent in August compared to the same month last year, mainly due to expensive meat and poultry, seasonings, eggs, milk, rice, and fruits and vegetables. The index for components, excluding food and beverages, mainly fuel and electricity costs, edged up only 1.77 per cent.
Other consumption goods such as milk, feed meal, student uniforms, pesticides, seasoning sauces, soap and instant noodles were down less than 25 satang per unit.
Hiking the daily minimum wage to Bt300 will barely nudge inflation, Yanyong said.
The ministry's study showed that for every 1 per cent in wage increases, inflation would climb by just 0.08 per cent. As the government will prepare other measures to drive down the costs of enterprises, inflation will not flare up, he said.
It also found that for every 1-per-cent increase in the rice price, inflation would grow by 0.02 per cent. The higher pledging price of rice will only create a small bump in the consumer price index.
Last month, core inflation, which excludes volatile food and fuel prices, was 2.85 per cent year on year, and 0.27 per cent month on month.
In the first eight months, core inflation was 2.12 per cent year on year. That was well within the Bank of Thailand's annual policy target of 0.5-3 per cent.
