Confidence hits five-month high
Although consumer confidence has hit a five-month high, the rising cost of living is a major concern that could dent sentiment in the long run.
The results of a survey by the University of the Thai Chamber of Commerce (UTCC) released yesterday show that the Consumer Confidence Index in February rose for the third straight month, from 74.2 points in January to 75.5 points.
The improvement is attributed mainly to the Constitution Court’s green light to the government’s two executive decrees on flood-prevention measures and signs of economic recovery to growth of 5.5-6.5 per cent this year, despite widely reported bomb blasts in Bangkok last month.
Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said the court’s verdict to support the government’s spending was a major reason for the higher confidence. Consumers also gained confidence because of greater political stability.
The court on February 22 ruled that the government’s executive decrees to borrow Bt350 billion and transfer the Financial Institutions Development Fund’s debt to the Bank of Thailand did not violate the Constitution.
Consumer confidence increased despite several negative factors, including the bomb blasts and the blacklisting of Thailand by the Financial Action Task Force on |Money Laundering last month.
“Consumers’ sentiment has recovered continuously as they foresee a clearer plan of the government to prevent flooding this year. However, people are highly worried about the skyrocketing cost of living and expensive goods,” Thanavath said.
He pointed out that the confidence index on the cost of living had dropped to the lowest level in eight months, from 57.1 points in January to 55.3 points in February. The confidence index on future cost of living (in the next three months) also dropped last month from 78.6 points in January to 75.7 points.
To ensure rising consumer confidence, Thanavath said the government must have a clearer plan to tackle the rising cost of living. Consumers feel that their incomes cannot cover rising goods prices.
An increase in the minimum wage and the government move to raise payments for skilled labourers in 22 industries by 11.7-42.9 per cent should help boost confidence on the cost of living in the upcoming months. He added that rising confidence continued to encourage consumers to spend more money on durable goods such as new cars, houses and travel, and to start new businesses.
Wachira Kuntaweethep, a lecturer at the centre, said other indices related to consumer confidence also grew last month, though they remained below 100, which indicates weak confidence.
Based on a survey of 2,233 people, confidence in future income grew from 93.1 in January to 94.3 points last month. The index on future employment opportunities rose from 65.4 points to 66.7 points.
Most respondents to the poll said their spending behaviour would be unchanged from last year.
