Inflation spike is temporary: BOT
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Though inflation in October increased to 4.19 per cent, Bank of Thailand Governor Prasarn Trairatvorakul yesterday insisted that price pressure would ease in the next one or two months when the agricultural and transport sectors recover from the severe fl
He attributed the inflation spike last month to the floods, which had resulted in a supply shock.
“Higher inflation could, however, be temporary, due to rising prices of vegetables, fruits and foods as a result of the floods. It’s a normal supply shock. In the next one or two months, [price pressure] is likely to ease as [agricultural] production will likely resume and transport will likely return,” Prasarn said.
This year’s overall inflation figure is estimated to stay within the central bank’s target range, he added.
Headline inflation is projected at 3.8 per cent on average, and core inflation is expected to come in at 2.4 per cent over the year.
Headline inflation in the first 10 months was 3.79 per cent year on year, while the October figure rose 0.19 per cent from the previous month.
October core inflation, excluding volatile food and energy prices, was 2.89 per cent year on year, and 0.07 per cent month on month.
Commerce Ministry permanent secretary Yanyong Phuangrach said yesterday that the floods could well push annualised inflation above the target of 3.8 per cent, because of higher prices of food and other goods.
A ministry study found that the flooding would raise fourth-quarter inflation by 0.38 percentage point, and full-year inflation by 0.1 percentage point.
Spiking demand for food and other goods is pushing up inflation, but at the same time the floods could dampen purchasing power, and hence lower inflation, he said.
Last month, the food and beverage price index surged 9.86 per cent, the fastest pace for 32 months. The index for components, excluding food and beverages and representing mainly fuel and electricity costs, edged up only 0.75 per cent.
To address spiking demand, the ministry will import more products, including 3.6 million cans of fish and 300,000 packs of instant noodles. Big C will import 650,000 eggs, and Big C and Tesco will import a combined 5.4 million bottles of drinking water for retailing in the second week of this month, Yanyong said.
