10-month inflation positive as October CPI rises 0.34%

The ministry reported the 10-month inflation rate of 0.06 per cent after October’s CPI edged up 0.34 per cent year on year, the seventh consecutive month of positive inflation, attributed to higher fuel prices.
Month-on-month inflation was 0.16 per cent on higher prices for fuel and some goods, especially vegetables.
The ministry has retained its inflation projection for this year at 0-1 per cent as it expects higher inflation in the remaining months. 
The projection assumes the price of Dubai crude oil will average US$35-$45 per barrel, higher than the previous forecast of $30-$40, but the baht’s appreciation will offset the higher oil-import value. The baht will range between 35 and 37 to the US dollar. 
Gross domestic product will grow by 2.8-3.8 per cent this year, the ministry predicts.
“Amid positive signs of a recovery in inflation, the ministry will retain the inflation target for this year, as inflation has gradually returned to positive territory,” Pimchanok Wornkorporn, deputy director-general of the ministry’s Policies and Trade Strategies Bureau, said yesterday.
She said the expected slight increases in the CPI in the remaining months should benefit the economy and encourage more spending.
Last month, prices of foods and beverages rose 0.89 per cent year on year, while non-food-and-beverage prices increased 0.02 per cent.
Core inflation, which excludes volatile food and fuel prices, firmed in October by 0.74 per cent year on year and by 0.04 per cent month on month. Average core inflation in the first 10 months of the year was 0.74 per cent, which was in line with the Bank of Thailand’s forecast of 0.5-3 per cent.
Meanwhile yesterday, the BOT reported that the business sentiment index in October declined from 50.3 in September to 49.2, below the 50-point benchmark. This follows the lower confidence in the services sector. 
The weaker activities were reflected by a relatively subdued degree of confidence in order books, production and performance sub-indices, especially from respondents in hotel and restaurant sector, affected by the reduction in the number of Chinese tourists resulting from the government crackdown on zero-dollar tours. 
Auto-parts retailers indicated softer confidence due to a slowdown in domestic car sales. This was in line with fewer new orders and lower output by automobile producers, due to weak domestic demand as potential buyers wait for promotional campaigns at the Motor Expo late in the year. 
For the next three months, most respondents remained positive, reflected by the index remaining above the 50-point mark. However, the proportion of respondents with an optimistic view declined in October from the previous month, reflected by the index declining from 54.7 to 53.4. This was the result of concerns about the business outlook in the manufacturing sector, particularly in the automobile sector. 
The degree of negative sentiment was heightened by a decrease in orders and production and in performance sub-indices from expectations of a slowdown in automobile sales in the coming period.