Ministry forecasts 2.1% inflation in Q4 despite gas prices

The ministry yesterday reported that the Consumer Price Index in September marked the lowest expansion in nine months at 1.75 per cent year on year, and a drop of 0.17 per cent compared with August this year. 

Full-year inflation will average out at 2.14 per cent, within the ministry’s forecast of 2-2.8 per cent.

“Higher prices of liquefied petroleum gas and natural gas for vehicles will have only a slight impact on inflation, expected to be less than 0.002 per cent in the fourth quarter, as about 70-80 per cent of vehicles in the transport sector are run on diesel. Far fewer vehicles in the sector use LPG and NGV,” said Amparwon Pichalai, deputy permanent secretary of the ministry.

LPG and NGV account for a mere 0.37 per cent in the ministry’s inflation weight basket.

On a monthly basis, LPG is weighted for 0.00036 per cent in inflation, while NGV accounts for 0.00048 per cent. 

The ministry has also estimated that if taxi fares rose by 8 per cent, it would drive up the monthly inflation rate by 0.00089 per cent, and by another 0.00122 per cent if the fares went up 11 per cent. 

The fuel costs of taxis account for 0.2 per cent in the inflation weight basket.

Amparwon said inflation would be under control for the rest of the year, thanks to low prices for fuel and farm produce in the world market. However, if winter lasts longer than usual, it could cause higher inflation. Low inflation in September was a result of lower fuel costs and cheaper meat during the Vegetarian Festival.

Among the ministry’s inflation basket of 450 items, the prices of 169 products increased, compared with 159 in August, while 202 remained unchanged and 79 decreased from the previous month.

Core inflation in September, which excludes volatile fuel and food prices, was 1.73 per cent year on year, and 0.01 percentage point down from August. Core inflation in the first nine months was estimated at 1.56 per cent, well under the Bank of Thailand’s projection of 0.5-3 per cent this year.

Vallop Vitanakorn, vice chairman of the Thai National Shippers Council, said rising LPG and NGV prices should not have a major impact on the industrial sector’s transport costs as most are diesel-driven. However, the ceramics industry will be hit as it mostly uses LPG in its operations.