November inflation dips to five-year low of 1.26%
CPI drops 0.12% from October in sixth decline in a row; deflation ruled out
The Consumer Price Index rose 1.26 per cent in November, the smallest expansion in five years, according to official figures revealed by the Commerce Ministry yesterday.
The CPI also dropped 0.12 per cent from October, the sixth consecutive monthly decline.
For the 11-month period, the CPI grew 2.02 per cent year on year. The ministry expects inflation in the fourth quarter to be 1.6 per cent, and 1.8 per cent for the second half.
Index still increasing
Amparwon Pichalai, deputy permanent secretary of the ministry, said there was no fear of deflation, since the index was still increasing, albeit slowly.
Among the ministry’s CPI basket of 450 items, prices of 197 products increased in November, while 157 remained unchanged and 96 decreased from the previous month.
With a positive outlook for next year assuming low fuel prices and stable goods prices, the ministry is projecting inflation in the range of 1.8-2.5 per cent, compared with this year’s 2-2.8 per cent.
For 2015, it projects growth in gross domestic product at 4-5 per cent, the average Dubai oil price at US$90-110 per barrel, an exchange rate in the range of Bt31-34 against the US dollar, and the government maintaining price freezes and other cost-of-living relief measures.
Core inflation in November, which excludes volatile fuel and food prices, was 1.60 per cent year on year, down 0.11 percentage point from October. Core inflation in the first 11 months was 1.57 per cent, well within the Bank of Thailand’s projection of 0.5-3 per cent for the full year.
Gundy Cahyadi, a DBS Bank economist, commented that with inflation at a five-year low, any interest-rate hike by the Bank of Thailand looked to be some distance away for now. There is a chance that the BOT may even ponder whether a rate cut will be beneficial at this stage.
Rate cut unnecessary
“But as we have constantly pointed out, any rate cut at this stage is unlikely to prove significant in boosting growth. The recovery in consumption growth takes time to be realised and besides, the government is still set to accelerate its projects in early 2015.”
