BANGKOK, Thailand – The Trade Policy and Strategy Office (TPSO) under the Ministry of Commerce has reported that the recent minimum wage increase will have a limited effect on overall inflation rates.
Mr. Poonpong Naiyanapakorn, Director of TPSO, presented the findings of an analysis titled “Impact of Minimum Wage Increase on General Inflation Rate” following the official announcement in the Royal Gazette by the Wage Committee. The new minimum wage rates, effective from January 1, 2025, range between 337 and 400 Baht per day, representing an increase of 7–55 Baht per day on average (approximately 2.9%).
According to the analysis, the wage adjustment is expected to increase inflation by approximately 0.15–0.30%, with the overall inflation rate for 2025 projected to remain within 0.3–1.3% (with a median of 0.8%), as estimated by TPSO in December 2024.
Impact Analysis by Categories:
TPSO’s analysis, conducted using input-output tables from the National Economic and Social Development Council (NESDC) and labor statistics from the National Statistical Office and the Ministry of Labor, divided goods and services into six categories based on the level of impact from the wage adjustment:
Government-Regulated Goods and Services (22%)
Includes water, electricity, diesel, gasohol, education fees, tolls, public transportation, and healthcare services. These items are under government control and are not expected to see price increases.
Industrial Goods with Minimal Labor Costs (25%)
Includes daily necessities such as sugar, salt, cooking oil, beverages, detergents, and durable goods like vehicles and appliances. Prices in this category are unlikely to rise due to the extensive use of automated production systems.
Labor-Intensive Agricultural Products (22%)
Covers fresh produce, livestock, and crops. Although these sectors are labor-intensive, they are governed by market supply and demand, limiting the ability to pass increased labor costs to consumers.
High-Risk Goods and Services (16%)
Includes ready-to-eat meals, particularly small-scale businesses like food stalls and takeout vendors. However, stable costs for ingredients like vegetables, eggs, and pork will minimize the impact on this group.
Housing and Rental Costs (14%)
Rental prices depend more on market demand and supply rather than labor costs. The recovering real estate sector is expected to keep rental prices stable.
Skilled Labor Services (1%)
Includes specialized services such as electricians, plumbers, construction workers, and caretakers. These sectors typically already pay above minimum wage, so the impact will be minimal.
Outlook for 2025:
Mr. Poonpong emphasized that the detailed categorization of goods and services will allow for close monitoring and targeted policy measures to ensure fair treatment for both producers and consumers. He also highlighted that the overall inflationary impact is expected to remain low, thanks to government measures to reduce the cost of living and the improving domestic economy. Rising consumer spending, supported by economic restructuring, stimulus packages, and reduced household debt burdens, is anticipated to drive increased revenues and profits for businesses without necessitating significant price hikes for goods and services. (TNA)
