Thailand’s Consumer Price Index (CPI) - the inflation rate - rose to 113.23
percent in August, a 4.29 percent increase year-on-year, and the highest in
35 months, Yanyong Puangrach, permanent secretary for commerce announced on
Thursday.
He said the increase is deemed appropriate for the
current economic conditions.
The rise in the inflation rate resulted from increased
prices for food and beverages of 8.43 percent.
The price index of rice, starch, and flour products rose
1.93 percent, meats by 13.76 percent, and eggs and dairy products by 4.95
percent. Pork in August remained high at 150-160 baht per kilogram but
dropped slightly at the end of the month.
The CPI in the first eight months was up 3.72 percent,
compared to the same period last year.
The permanent secretary for commerce is confident that
the inflation rate for the whole year could be within the range of 3.2-3.7
percent as projected due to the suspension of contributions to the State Oil
Fund which will help ease cost of living.
Although the cut in fuel prices has yet to make
significant change in the price of consumer goods, it has helped reduce the
cost of living for transport, which will contribute to a last quarter drop
in the inflation rate by 0.9 percent. It is projected that the fourth
quarter to stay around 3.6 percent on average.
Regarding the government’s policy to raise the daily
minimum wage to 300 baht, it will in theory not impact inflation because it
will not cause much more spending by the public. One percent wage raise will
affect inflation by 0.08 percent in one year.
In addition, the rice mortgage scheme will slightly
affect inflation. If rice prices edge up by one percent, it will result in
an increase of inflation by only 0.02 percent but if rice prices rise by 50
percent, inflation rate will move up by about one percent.
However, if domestic rice prices increase, the government
is ready to provide bagged rice at lower prices than the market price to the
public under the “blue flag” project and will strictly control the capital
cost of rice production.
High rice prices will cause bagged rice prices from the
new crop season to rise. Bagged rice sold in the market currently is from
old stocks with a lower capital cost.
Amid concern that Thailand’s rice mortgages will lead to
higher rice prices in the global market and will affect inflation in trade
partner countries, the permanent secretary for commerce asserted that
overall rice prices will not increase considerably and it will have only a
slight impact on inflation. He said it is unfair that farmers earn less
income to export rice at low prices to rich countries. (MCOT)
