Inflation dips despite food, fuel hikes
In spite of rising prices of fuel and food, the Commerce Ministry is confident inflation can be restrained at 3.3-3.8 per cent this year.
The ministry reported yesterday that inflation in February weakened slightly from the previous month, despite continued hikes in fuel and food prices.
Year-on-year inflation recorded 3.35 per cent last month, a slight improvement by 0.37 percentage point from January’s figure. As a result, inflation in the first two months was 3.36 per cent.
Yanyong Phuangrach, permanent secretary for the Commerce Ministry, said prices were likely to rise consistently because of the expected increases in fuel prices in coming months. However, he is convinced that inflation will be kept under control, as the government will enforce stringent rules on rises in goods prices.
The ministry’s research suggests that the recent increase in Oil Fund contributions will only drive the inflation rate by 0.112 percentage point this year. An increase in the price of liquefied petroleum gas by 75 satang per kilogram will drive inflation by 0.0018 percentage point, while a rise in the price of natural gas for vehicles will have a negligible effect.
The ministry projects this year’s inflation rate at 3.3-3.8 per cent. This is based on an assumption of an average Dubai oil price of US$95-$115 per barrel, an exchange rate of Bt29-Bt33 against the greenback, and continuation of the government’s cost-of-living relief measures.
The ministry found the average Dubai oil price is currently $115.94 per barrel.
