Cut in fuel prices welcomed, tipped to boost spending and economic growth

And while the price of goods will not be affected by a 14-satang increase in the retail price of diesel, some have expressed concern that a rise in the retail price of gas could push up inflation.

Petrol and gasohol (petrol mixed with ethanol) was down by a range of Bt1 to Bt4 per litre. 

The new fuel prices, effective from yesterday have cut Bt3.89 a litre off the price of octane 95 fuel to Bt44.86, while gasohol 95 was down from Bt39.93 a litre to Bt37.8. 

Gasohol E20 (mixed with ethanol 20 per cent) is now Bt33.98 a litre, down Bt1. 

Meanwhile, the diesel price was by 14 satang from Bt29.85 a litre to Bt29.99.

Kesara Manchusree, president of the Stock Exchange, said the fuel price cuts would help boost the economy as every sector would see a drop in energy costs and this would ultimately boost the country’s competitiveness. 

The slight rise in the diesel price would not affect inflation, the Bank of Thailand and Commerce Ministry said. 

“The lowering of energy costs will slightly lower the central bank average estimation for headline inflation [including food and energy prices] this year but will not affect core inflation,” Roong Mallikamas, senior director of Macroeconomic at the Bank of Thailand, said.

She said the effect of lower energy costs on core inflation would be “insignificant” because the energy cost was lowered not increased and that the effect would not also spur lower costs of general goods as business operators were reluctant to lower the prices of products. This was because they believe that raising prices is more difficult if they have been lowered.

Jintana Chaiyawonnagal, head of the Internal Trade Department, said the rise in the diesel price would have a very small impact on prices of goods as most industry shipment relies on NGV and LPG gas for transportation. 

“However, if the gas price is raised in the following quarterly period, it could cause higher goods prices in the future,” she said.

Jintana said the diesel price was back at the same price after decreasing for three months and producers of consumer goods had already agreed to freeze retail prices until November.

She said lowering the price of petrol and gasohol would lower living costs and increase spending power, so inflation should stay under the target of 2-2.8 per cent, from an average of 2.23 per cent in the first seven months of the year.

Energy permanent secretary Areepong Bhoocha-oom said the oil price adjustments came as part of a policy to “neutralise” excise tax rates levied on each finished oil product, to help reflect the true cost of fuel.

More than 20 million motorcyclists were among the fuel users who would enjoy a price cut, he said, while the price of diesel was still no more than Bt30 a litre, and the Oil Fund continued to earn a monthly inflow of Bt2.5 billion. 

Meanwhile, Prime Minister Gen Prayuth Chan-ocha has assigned the Energy Ministry’s Department of Mineral Fuels and oil refiners to discuss a possible halt in petroleum exports, in light of heated debates on the energy situation in Thailand. The country currently exports about 12,000 barrels of crude oil a day.