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Slight inflation in June suggests 1% for 2016

Jul 01. 2016
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WITH A STEADY rise in the Consumer Price Index, inflation for the whole year should be in positive territory, at around 1 per cent, on increasing fuel and food prices, the Commerce Ministry reported yesterday.

The ministry reported that inflation in the first half of this year was slightly negative at minus-0.09 per cent, after June’s CPI edged up 0.38 per cent year on year, the third consecutive month of positive inflation.

Month-on-month inflation was 0.03 per cent on higher fuel and food prices, the latter due to a lower supply of agricultural crops.

The ministry has retained its inflation projection for this year at 0-1 per cent. The projection assumes the price of Dubai crude oil will average US$30-$40 per barrel, the baht will range between 36 and 38 to the US dollar and gross domestic product will grow by 2.8-3.8 per cent.

“Following positive signs of a recovery in inflation, the ministry will retain the inflation target for this year. The Brexit [vote in the United Kingdom] should not yet have an impact on Thai economic growth or inflation,” Somkiat Triratpan, inspector-general of the ministry and director of its Policies and Trade Strategies Bureau, said yesterday.

However, if UK voters’ decision to exit the European Union has a big impact on the global economy, and the exchange rate continues to fluctuate, the ministry may need to review it inflation projection in the future, he added.

Somkiat said the expected slight increases in the CPI in the remaining months should benefit the Thai economy and encourage more spending.

Last month, prices of foods and beverages rose 2.8 per cent on lower supply during the dry season and high demand for some foods, while non-food-and-beverage prices decreased 0.94 per cent.

Core inflation, which excludes volatile food and fuel prices, firmed slightly in June by 0.8 per cent year on year and by 0.07 per cent month on month.

Average core inflation in the first half of the year increased 0.73 per cent, which was in line with the Bank of Thailand’s forecast of 0.5-3 per cent.

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