Thailand's inflation rate accelerated to a 13-month high in December, exceeding economists' expectations, as state subsidies failed to counter rising food prices.
The consumer price index was up 3.63% last month from December 2011, the Commerce Ministry said on Wednesday - a 13-month high, Bloomberg reported. This compared with a 2.74% increase reported in November. The median estimate of 12 economists according to a Bloomberg financial news survey was 3.22%.
Buildings in Bangkok (EPA photo)
The Bank of Thailand cut the benchmark interest rate twice last year to support the economy as it recovered from the floods of 2011 and global demand for its exports weakened. The government has raised minimum wages and offered a diesel-tax subsidy to boost consumption, while the monetary authority has forecast inflation will slow to 2.8% this year.
"We expected the central bank to leave the key rate unchanged at least in the first half, unless there is an unexpected shock to the global economy," Sarun Sunansathaporn, an economist at Tisco Securities, said before the release.
Mr Sarun said there is a chance they may start raising the rate in the second half if food-price inflation and the impact from the wage increase kick in.
The government last month extended the diesel tax exemption to the end of January and approved a new round of increases in the daily minimum wage to 300 baht from the beginning of this year, after a similar raise in April last year in seven provinces including Bangkok.
Consumer prices rose 0.39% in December from the previous month, according to Wednesday's report. Inflation averaged 3.02% in 2012, the ministry said, predicting price gains of 2.8% to 3.4% this year.
Core inflation, which excludes fresh food and fuel costs, was 1.78% last month and averaged 2.09% last year.
The central bank uses the measure to guide policy and expects price gains will stay below its target of 3% this year, the ceiling also for last year.
Watcharee Wimuktayon, permanent secretary for commerce, said on Wednesday that the 300 baht daily minimum wage nationwide policy, which took effect from Jan 1, would have only a minimal impact on inflation.
The wage hike would push up inflation by only 0.1% and that it would have no significant impact that leads to an increase in product prices, particularly consumer goods and fresh foods, Mrs Watcharee said.
Regarding the small and medium enterprises (SMEs) affected by the wage hike, Commerce Minister Boonsong Teriyapirom had ordered the departments of Internal Trade, Trade Business Development and International Trade Promotion to provide them with needed assistance, she said.
This assistance included helping them to easily access funding sources and look for new export markets, she added.
Arkom Termpitayapaisit (File photo)
Arkom Termpitayapaisit, secretary general of the National Economic and Social Development Board (NESDB), predicted on Wednesday that the country’s economy would grow by more than 5.5% this year and exports would expand by around 12.2%.
Mr Arkom said there is a strong possibility that 2013 gross domestic product (GDP) growth would be higher than 5.5% on the back of continuing global economic expansion, including in the United States, Europe, China and Japan.
The government’s investment in infrastructure development megaprojects and increasing domestic consumption were other positive factors that would help mobilise the economy this year, he added.
The global economic recovery would also boost exports to grow by about 12.2% this year. However, the cabinet meeting had set the export expansion target for the year at 9%, as cabinet members were worried that unexpected economic crises could occur again, said the NESDB secretary general.
He said the increase in the minimum daily wage to 300 baht since Jan 1 would increase the purchasing power of labourers, while the affected manufacturers would receive needed assistance from the government.
Mr Arkom had confidence that the wage hike policy would not lead to the layoff of millions of workers as some fear because the current unemployment rate was very low.
Meanwhile, Thai and foreign tourists spent more than 13 billion baht travelling during New Year holiday, with the northern part of the country getting the highest number of visitors, according to the Tourism Authority of Thailand (TAT).
Thawatchai Aranyik, TAT's deputy governor for domestic marketing, said approximately 2.3 million people travelled throughout the country, including usually less popular destinations such as Prachinburi and Sa Kaeo provinces, during the recent holiday.
Hotels and resorts countrywide reported an average accommodation occupation rate of 95%.
The most popular spot this year was again the North because of its cooler weather. More than 485,000 Thai and foreign tourists visited the northern provinces, bringing 3.5 billion baht to the region.