Commerce forecasts 2012 inflation at 3.3-3.8 per cent

This year inflation is projected to come in at 3.8 per cent after the inflation rate last month continued to rise to 4.1 per cent year on year.
Inflation in the first 11 months of this year was 3.83 per cent, close to the ministry’s annual forecast of 3.8 per cent. Compared with October, November’s inflation was 0.21 per cent, mainly on higher food and beverage prices.
Permanent secretary Yanyong Phuangrach said yesterday that inflation was expected to cool down this month as the flood situation improves and fuel prices weaken. Inflation is also expected to grow steadily next year after the flood waters recede and spending stages a comeback.
“Inflation should continue to increase slightly throughout next year after hikes in the minimum wage and fuel prices, while consumers will spend more. The government does not have to show concern over too high an inflation rate next year, so it should cut the interest rate by another 0.25 percentage point next month,” Yanyong said.
The Bank of Thailand’s Monetary Policy Committee on Wednesday pruned the policy rate by only 25 basis points, against the market expectation of a bolder move, showing its worry over economic rehabilitation efforts next year. It insisted that the trim was enough to accommodate recovery in the economy. Next year, the central bank expects gross domestic product to pick up by 4.8 per cent.
The inflation target for next year assumes the average Dubai oil price climbing to US$95-$115 per barrel and the average exchange rate at Bt29-Bt33 against the greenback, as the US dollar is expected to falter next year because of the slowdown in US economic growth. It also assumes that the Thai government will continue with measures to ease the cost of living.

UPWARD TREND
Though inflation has stayed on an upward path in the past few months, it is still expected to come under this year’s target at 3.8 per cent, with this month’s year-on-year rate anticipated at 3.6 per cent.
Last month, core inflation, which excludes volatile food and energy prices, came in at 2.90 per cent year on year and 0.03 per cent month on month. Core inflation was measured at 2.33 per cent for the first 11 months of the year, well within the BOT’s target of 0.5-3 per cent for the whole year.
The Commerce Ministry also reported that the producer price index rose by 5.6 per cent in the first 11 months because of increasing prices for fuel and raw materials for industry. The construction price index jumped 6.3 per cent in the period on rising prices for steel and cement.