Floods drive consumer price by 4.19% in Oct
Thai consumer price index increased by 4.19 percent year on year last month, raised largely by floods that damaged farm production and the manufacturing sector, according to the Commerce Ministry.
Commerce Permanent Secretary Yanyong Phuangrach admitted that the annualised inflation will exceed the target due to severe impacts from flooding. Goods and services costs are on the rise, and floods will raise the last quarter's inflation by 0.38 percentage point and the annualised inflation by 0.1 percentage point.
Inflation in the first 10 months of this year rose 3.79 percent, higher than the annual target of 3.2-3.7 per cent.
Core inflation in October rose 2.89 per cent on year and 0.07 per cent on month. Core inflation in the first 10 months is 2.28 per cent.
The monthly inflation figure is below market expectation of 4.5 per cent. DBS Research expected core inflation at 3 per cent in the month.
The house also expects the core inflation to breach the top-end of the 0.5-3.0 per cent range in 2012, which is the inflation target range for 2011. But this will be rendered of reduced importance give the flagged move to instead target the headline rate in a range of 1.5-4.5 per cent in 2012. Despite higher figures, there are signs that the Bank of Thailand may cut the policy rate, given dismal economic figures.
In September, while exports (excluding gold) held up remarkably to expand 16 per cent on year, private consumption fell by 19 per cent month on month and 4 per cent year on year suggesting floods hurt domestic confidence. DBS said that the matters worsened in October as floods reached several industrial estates and prompted the government to expedite rehabilitation schemes.
"If the government succeeds at least in the near-term (in draining water from the industrial estates), growth in 2012 should be faster-than-trend (of 4 per cent) and BOT forecast of 4.1 per cent," DBS concluded.
Tisco Securities expected the floods to shave off the fourth-quarter economic growth forecast to 1 per cent due to dismal figures on industrial output, exports, consumption and investment. Earlier, it expected the economy to expand 5.2 per cent in the fourth quarter.
The annualised growth forecast will then be squeezed to 2.9 per cent, it said, from the earlier forecast of 4 per cent.
