Forecast for inflation cut to a maximum 3.5%
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With the outlook for the economy stable and product prices under less upward pressure, the Commerce Ministry has lowered its 2012 inflation target to a maximum 3.5 per cent, although consumers are still worried about the global economy.
“Inflation will be under better control by the government as fuel prices are low and the operating costs of businesses remain manageable thanks to steady interest rates,” permanent secretary Yanyong Phuangrach said yesterday.
The ministry reported that the Consumer Price Index (CPI) in the first half of the year rose by 2.95 per cent year on year, notably slower than the ministry’s forecast of 3.3-3.8 per cent.
Inflation will climb slightly in the rest of the year as oil prices are expected to stay benevolent, while most goods prices will remain constant, he said.
The ministry projects inflation this quarter at 3.3 per cent year on year.
Last month, the CPI advanced 2.56 per cent year on year and 0.16 per cent month on month, which was less than April’s 0.39 per cent.
The softening of inflation last month reflected the fall in fuel prices by 3.15 per cent year on year, while non-food prices grew slowly, by only 1.17 per cent, and food and beverages gained 4.72 per cent.
Some factors that could send inflation higher are the global economic crunch, natural disasters, fluctuating exchange rates and a change in the interest-rate policy in the future.
Core inflation, which excludes food and beverage prices and volatile fuel and electricity costs, posted only 2.37 per cent in the first half, well within the Bank of Thailand’s range of 0.5-3 per cent.
Last month, core inflation was 1.92 per cent year on year and 0.15 per cent month on month.
The ministry also reported that the Consumer Confidence Index improved slightly from 27.4 points in May to 27.6 last month, thanks to lower fuel prices and the drop in some goods prices.
However, three-month forward-looking confidence has slipped from 33.4 points in May to 32.1 as worries snowball over the global economic downturn, Yanyong said.
