Ministry maintains 0.6-1.3% inflation target despite decline
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DESPITE INFLATION dipping into negative territory for the past six months, the Commerce Ministry is leaving its inflation target for this year at 0.6-1.3 per cent in anticipation of oil prices recovering in the final quarter.
“Annualised inflation should be back to positive growth,” Somkiat Triratpan, inspector-general of the ministry and director of its Policies and Trade Strategies Bureau, said yesterday.
The ministry reported that the Consumer Price Index continued weakening in June by 1.07 per cent year on year. Month-on-month inflation was up slightly by 0.10 per cent from the firming in domestic oil prices. The CPI for the first half was lower by 0.81 per cent than the same half last year.
Although inflation had gone into reverse for six months, the ministry denied that Thailand had slipped into a deflationary phase, since consumers still have high purchasing power. The negative inflation was due mainly to plummeting oil prices.
The ministry has projected that inflation in the third quarter would decline by 0.3-0.5 per cent, and bounce back to positive growth in the fourth quarter.
The political conflicts in the Middle East and the South China Sea could drive global oil prices higher, and that would push up inflation in the near future. The depreciation of the baht should also cause inflation to warm up.
June’s inflation was above May as the prices of domestic fuel and some other products came under upward pressure. Out of the ministry’s inflation basket of 450 items, prices increased for 165 items including pork, eggs and fuel, while 201 remained unchanged and 84 items including rice, limes, sugar and paper napkins decreased from the previous month.
Last month, core inflation, excluding volatile fuel and food prices, was recorded as 0.94 per cent year on year and 0.06 per cent month on month. Core inflation in the first half was 1.22 per cent year on year.
To help alleviate the cost of living for consumers during the drought, the ministry has joined forces with 10 large manufacturers to supply 20 essential consumer products to 250 cooperative shops nationwide under the Bank of Agriculture for Agricultural Cooperatives.
Commerce Minister Chatchai Sarikulya said this project would sell products to consumers and farmers at prices undercutting the market by 10-40 per cent.
