Slow price increases may continue
Play
inflation edged up in August by only 1.59 per cent - the slowest in 45 months - and is expected to remain mild for the rest of this year despite the hikes in the price of cooking gas and other daily items.
“The increase slowed due to declining demand and supply, particularly demand in light of the economic slowdown domestically and overseas,” Vatchari Vimooktayon, permanent secretary of the Commerce Ministry, said yesterday.
Inflation rose on-year at a leisurely pace not seen since October 2009, and only 0.01 per cent from the previous month. Inflation averaged 2.47 per cent for the first eight months and could fall below the 2.8-3.4-per-cent target for the full year.
The political conflict in the Middle East was now a factor that could spike inflation over the rest of this year, she said.
Last month, among the 450 goods and services in the ministry’s inflation basket, the prices of 159 items advanced from the same period last year against decreases in 91 items. The rest were unchanged.
Food and beverage prices bubbled up 2.65 per cent year-on-year, while non-food items rose slightly last month by 1.06 per cent on-year.
Against public fears of a surge in the cost of living, the ministry’s calculations showed that increases in the price of cooking gas, or liquefied petroleum gas for household use, expressway tolls and fuel tariffs on Sunday would raise inflation in the last four months by only 0.1 percentage point. And these rises would lift next year’s inflation by 0.3 percentage point.
Given the slight impact, the ministry sees no reason for an increase in food and goods prices, Vatchari said.
Siam Commercial Bank’s research showed that when the LPG price is fully raised by Bt6 per kilogram next year, for a household consuming 15kg per month, its monthly expense will rise by Bt90 per month or only 0.4 per cent of average household income.
Credit Suisse also sees limited risk to inflation from the recent rise in the oil price and believes year-on-year headline inflation will be softer in the second half of this year than the first half. The bank also sees it likely for the Bank of Thailand, at its October 6 meeting, to cut its policy rate from 2.5 per cent, given benign inflation and slowing growth.
