First negative inflation likely in six years
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THAILAND is highly likely to post negative inflation in 2015 for the first time in six years, mainly because of plunging oil prices and the sluggish economy.
“Annualised inflation could be lower than the previous target of 0.6-1.3 per cent and could enter negative territory. But it should not be a worry, since it is due to lower global oil prices, which have affected many products,” Somkiat Triratpan, inspector-general of the Commerce Ministry and director of its Policies and Trade Strategies Bureau, said yesterday.
The ministry will next month officially announce its new inflation projection for this year.
Thailand posted an inflation rate of negative-0.9 per cent in 2009 after the US-led financial crisis, a period that also saw a steep decline in global oil prices along with populist measures by an elected Thai government to subsidise the cost of living.
The Commerce Ministry reported that the Consumer Price Index continued weakening in August by 1.19 per cent year on year, the eighth consecutive monthly contraction.
The CPI for the first eight months was 0.89 per cent lower than in the same period last year.
Although inflation has gone into reverse for several months, the ministry denied that Thailand had slipped into a deflationary phase, since prices of consumer goods have either increased or stayed the same. The negative inflation was due mainly to plummeting oil prices, while core inflation, which excludes fuel prices, still increased, Somkiat explained. The ministry has projected that inflation in the remaining months is not likely to bounce back to positive growth on expectations of lower electricity costs and gas prices.
The anticipated low economic growth this year will also cause lower inflation. However, the depreciation of the baht should have the opposite effect, as some sectors will face higher production costs due to the rising prices of imports.
Of the ministry’s inflation basket of 450 items, prices increased last month for 148 items including pork, eggs and chicken, while 191 remained unchanged and 111 items decreased in price from July.
Last month, core inflation, excluding volatile fuel and food prices, was 0.89 per cent year on year and 0.03 per cent month on month. Core inflation in the first eight months was 1.14 per cent year on year.
