Inflation target cut further
The Commerce Ministry has cut its inflation target for the year to negative territory - minus 0.2 per cent to minus 1 per cent - much lower than the previous projection of plus 0.6-1.3 per cent, following the continued drop in oil prices and sluggish dome
This represents the first annual decline in prices since 2009, when inflation contracted by 0.9 per cent during the global economic downturn and the government’s measures to relieve the cost-of-living burden.
The ministry reported yesterday that the Consumer Price Index (CPI) for September had fallen 1.07 per cent year on year, declining for the ninth consecutive month.
Month-on-month inflation was down 0.05 per cent.
The CPI for the January-September period was down 0.9 per cent from the first three quarters of last year.
"Inflation could be lower than expected this year, since oil prices are much lower in the world market," said Somkiat Triratpan, inspector-general of the Commerce Ministry and director of its Policies and Trade Strategies Bureau.
He made the remark as the ministry announced its revised 2015 forecast for a contraction of 0.2-1 per cent in light of an expected slowdown of Thai economic growth, lower fuel prices in the global market, and the depreciation of the baht.
Despite much lower inflation, the ministry insisted that Thailand was not yet in a deflationary situation, as consumer spending had risen, as evidenced by increased revenue collection of value-added tax, he said.
Many other countries are also experiencing low inflation rates due to declining fuel prices and slow economic growth, he added.
Based on its revised inflation target for the year, the ministry now foresees gross domestic product expanding between 2.5 per cent and 3.5 per cent, down from the previous projection of 3-4 per cent.
The average Dubai oil price is now forecast by the ministry to be US$48-$58 (Bt1,750-Bt2,115) per barrel, from $50-$60, and the average exchange rate for the year is predicted to be Bt33-Bt35 against the US dollar, from Bt32-Bt34 previously.
Last month’s drop in the rate of inflation is attributed to lower fuel prices and electricity costs, as well as to some foods being cheaper.
Among the 450 products in the ministry’s inflation weighting, the price of 184 items increased, 160 remained the same and 106 decreased from the previous month.
Core inflation in September, which excluded volatile fuel and food prices, was 0.96 per cent year on year and 0.07 per cent month on month.
