Consumer confidence bounced back to hit an 18-month high in December, buoyed by falling oil prices, the Monetary Policy Committee's recent decision to maintain the policy interest rate and the government's discount campaigns across the country during the New Year celebrations.
The University of the Thai Chamber of Commerce yesterday reported the consumer confidence index rose to 81.1 points from 79.4 in November, which fell from 80.1 points in October.
It was the highest since June 2013, when the index was 81.6.
"The lower oil price is possibly the prime factor," said Thanavath Phonvichai, vice-president for research. "It helped raise the amount in people's pockets."
Falling oil prices are estimated to help Thai consumers and businesses save about 10 billion baht a month or 120 billion baht a year.
On average, Thailand consumes about 22 million litres of petrol (including gasohol) and about 55 million litres of diesel a month.
Local oil prices have dropped continuously since May, with the price of petrol falling by an average of 10 baht from 38.08 to 41.53 baht a litre in May, and that of diesel declining more than three baht from 29.99 baht per litre.
"Lower oil prices help increase disposable income. This will accordingly boost domestic spending, which is vital to the country's economic growth this year," he said.
"The government's acceleration of budget spending and investment could lift confidence in coming months."
Mr Thanavath said global oil prices were expected to average around US$40 per barrel in the first half of this year, leading domestic oil prices to possibly drop by another two baht per litre.
Nonetheless, he warned negative factors still exist, particularly the country's fragile economic prospects, the volatile global economy, weak export outlook, low farm product prices and concerns about the high cost of living.
Last November, the National Economic and Social Development Board trimmed its forecast to only 1% growth in 2014, down from between 1.5% and 2% projected in August, after it reported growth of only 0.2% year-on-year in the first nine months of last year.
Export value was also projected to be flat in 2014 against the 2% growth earlier forecast, with growth of 4% this year.
The economy may expand by 3.5% to 4.5% in 2015, said the government planning agency.