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Raw food costs jump 7.12 per cent in July while petrol prices decline: inflation report

Aug 01. 2019
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By The Nation

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The Consumer Price Index (CPI) increased 0.98 per cent year over year in July, rising from the 0.87 per cent in June. An increase in the indexes for raw food, which jumped by 7.12 per cent in July, continues to be a primary factor behind CPI increases, led by price rises in vegetables and fruits, pork, milled rice and milled glutinous rice, according to a July inflation report summary from Thailand’s Trade Policy and Strategy Office on Thursday.

 

The index for energy, on the other hand, fell 3.31 per cent in July, decelerating from the 3.86-per-cent drop in June following the nation-wide gasoline retail price cuts. The index for all items less food and energy (known as “core inflation”) rose 0.41 per cent in July year over year, according to the summary. 

The CPI in July rose 0.98 per cent (YoY) following an increase of 3.47 per cent in the index for food and non-alcoholic beverages. This was due primarily to the surge in the indexes for vegetables and fruits. The index for vegetables rose 20.01 per cent (due to increases in lemons, chillis and Thai eggplants) owing to the low-base effect and aggravated climate variability that has caused high product perishability.

The index for fruits was up by 9.18 per cent (guava, mango and durian). Moreover, the index for meats, poultry and fish increased 5.73 per cent (pork, chicken meat and tilapia). The indexes for rice, flour, and flour products rose 4.02 per cent (milled rice and milled glutinous rice) as rice stockpiles dwindled amid rising demand.

The index for eggs and dairy products rose 1.80 per cent (chicken eggs, fresh milk and soy milk), largely as a result of the rise of the index for eggs following higher production costs for transportation and animal feed.

The indexes for non-alcoholic beverages increased 0.90 per cent (carbonated drinks, hot/cold coffee and chocolate drinks). The indexes for food at home and food away from home rose 0.80 and 1.12 per cent, respectively (takeaway food, breakfast and prepared food), while the index for seasonings and condiments fell 0.93 per cent (cooking oil, ground coconut and oyster sauce).

Furthermore, the index for all items less food and beverages dropped 0.42 per cent. This was primarily caused by the decline in the prices of gasoline of all types (except for NGV), that led to the fall of the indexes for transportation and communication of 1.32 per cent.

The indexes for medical and personal care increased 0.87 per cent (shampoo, body powder and toothpaste), induced by higher market competition. The indexes for apparel and shoes dropped 0.04 per cent (shoes and male/female apparel).

In contrast, the indexes for public transportation fares rose 5.91 per cent. The indexes for shelter rose 0.27 per cent (electricity and rent of shelter). The indexes for recreation and education rose 0.73 per cent (van rental, school tuition and fees). The indexes for tobacco and alcoholic beverages rose slightly by 0.04 per cent.

The CPI in July 2019 increased 0.06 per cent from the index in June month over month, and rose 0.92 per cent for the first seven months (January–July) of 2019 annual over annual).

In summary, the rise of the CPI in July was primarily caused by the index for raw food, which continues to increase as a result of the aggravated climate variability and the low base from last year. In contrast, the decline in gasoline prices contributed negatively to the CPI, leading to lower production cost as evidenced by the fall in the producer price index.

Despite the recent slowdown in exports and the Manufacturing Production Index (MPI), the increase of value-added tax (VAT) collection and rising import volume still indicate the sustained expansion of domestic demand.

Going forward, the policies of the new government are expected to strengthen and foster the positive and stable outlook for the Thai economy, thereby causing the inflation rate in 2019 to stand within the target range of 0.7-1.3 per cent and approach the inflation target for 2019 of 2.5±1.5 per cent or 1-4 per cent in the medium-term, the summary said.

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