Deflation yet to arrive: ministry
ALTHOUGH inflation has been in negative territory for eight consecutive months, the country has not yet entered deflation, while the recent lowering of the policy interest rate should stimulate spending in the remaining months the year, according to the C
The ministry reported yesterday that the Consumer Price Index for April fell 1.04 per cent year on year and 0.02 per cent from March. This was the lowest inflation in five years and seven months – since September 2009 – and the CPI has fallen for eight consecutive months. Inflation in the first four months was negative-0.65 per cent year on year.
“With the oil price heading down, inflation has declined, but it has not resulted from lower spending. The lower policy rate should help stimulate spending in the remaining months,” said Somkiat Triratpan, director of the ministry’s Bureau of Trade and Strategy Policy. Last month, negative inflation was due to lower prices of fuels and fresh food. The ministry has projected that inflation rate will rise in upcoming months on more spending, while oil prices will also edge up soon.
The ministry has forecast that inflation this year will range between 0.6 and 1.3 per cent. This assumed the average Dubai oil price at US$50-$60 per barrel, the exchange rate at Bt32-Bt34 against the US dollar, and gross domestic product growing by 3-4 per cent. The ministry has forecast inflation in the current second quarter at negative-0.5-0.7 per cent.
Thanavath Phonvichai, director of the University of the Thai Chamber of Commerce’s Economic and Business Forecasting Centre, said Thailand had not yet sunk into deflation, since every country’s prices had also dropped in line with diving global oil prices.
“Inflation has declined as expected, but it is not yet a worry because the economy is still expanding and the unemployment rate has remained low.
