BANGKOK, Dec 3 – The Bank of Thailand (BoT) said Wednesday that inflation would be down for 1-2 years, that low oil prices would not obstruct Thai economic recovery next year and that low inflation would not lead to deflation.
BoT spokesman Chirathep Senivongs Na Ayudhya said inflation would slow in the next 1-2 years and oil prices would remain low until the first quarter of next year.
He said the Organization of Petroleum Exporting Countries (OPEC) will not cut their oil production to keep prices low to stop the United States from producing oil with a new and more expensive technology. Besides, the Thai government is restructuring energy prices.
Therefore, the Thai economy should grow better than it is this year, Mr Chirathep said.
He said that energy prices would neither block economic recovery nor cause deflation because although prices fell, consumption did not.
Lower energy prices would improve the balance of trade and cut business costs and the cost of living, he said. Thailand’s oil consumption will account for 12 per cent of its gross domestic product, Mr Chirathep said.
The central bank wants to base its monetary policies on headline inflation instead of core inflation which was attached to the prices of oil and fresh foods and did not include other factors.
With headline inflation, monetary policies would better reflect the public’s cost of living and the BoT could better communicate with people, Mr Jirathep said.
The BoT is waiting for approval from the government for the change.
