Reduced fuel prices to keep inflation low, ministry says
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Inflation should be lower in the remaining months of the year thanks to lower fuel prices, but the economy has not yet grown significantly this year, according to the Commerce Ministry.
The ministry yesterday reported that the Consumer Price Index in August marked three consecutive months of slow growth, at 2.09 per cent year on year, and dropped by 0.08 per cent compared with July this year.
The average annualised inflation rate in the first eight months was 2.21 per cent.
“Inflation will be low as most prices are expected to remain unchanged, while the economy has not shown a significant expansion because of lower prices of agricultural crops,” said Amparwon Pichalai, director of the ministry’s Trade Policy and Strategy Office.
The ministry projected an inflation rate of 2.2 per cent in the final quarter of the year, while average inflation in the second half will be 2.18 per cent.
Full-year inflation will be about 2.21 per cent, within the ministry’s forecast of 2-2.8 per cent.
However, the ministry needs to monitor oil prices in the global market closely, as they could increase next quarter and cause higher inflation. The political conflict between Russia and Ukraine could affect this situation.
Currently, the ministry’s inflation projection assumes Dubai crude oil will average US$110-115 per barrel.
Inflation in August was low because of the decision by the military’s ruling National Council for Peace and Order late last month to reduce some fuel prices by between Bt1 and Bt3.89 per litre, while increasing the retail price of diesel by 14 satang per litre.
The ministry reported that lower domestic fuel prices had lowered the inflation rate by 0.0191 percentage point a month, or by 0.076 percentage point in the remaining four months of the year.
However, as expected increase in the price of liquefied petroleum gas (LPG) in the remaining months would have a slight impact on inflation, by 0.0008 percentage point a month. And if the LPG price increases next year, it will drive up the inflation rate by 0.01 percentage point.
In August, from the ministry’s inflation basket of 450 items, the prices of 159 products increased, compared with 178 in July, while 91 remained unchanged and 200 items decreased from the previous month.
