Commerce: April inflation 2.42%

Rising food prices pushed headline inflation to 2.42% in April, permanent secretary for commerce Watcharee Wimuktayon said on Wednesday.

  • Published: 1/05/2013 at 03:58 PM
  • Newspaper section: topstories

Mrs Watcharee said headline inflation last month was up 2.42% year-on-year and 0.16% month-on-month due to higher prices of food and beverages. In the first four months of 2013, headline inflation rate was 2.92% year-on-year.

However, the strengthening baht caused inflation to rise at a slower pace, she said.

Last month's core inflation, which excludes food and energy prices, rose 1.18% year-on-year and 0.06% from the previous month. Core inflation for the first quarter was 1.39% from the previous year.

"The rate of inflation is expected to increase slightly in the second quarter," Ms Watcharee said. "The Commerce Ministry's headline inflation forecast for this year remains at 2.8% to 3.4%."

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Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce (UTCC), said the slowing down of inflation in Thailand is in line with the world economic situation.

"Inflation rates in the United Staes, the European Union and China are very low, indicating that the global economy is not recovering as we've hoped.

"Low inflation in Thailand is partly due to the government's measure to fix the diesel, LPG and CNG prices," Mr Thanavath said. "The energy prices do not reflect the actual cost and the cost of living because producers refuse to raise the prices in line with the market situation."

He said the current inflation could be a signal that the Thai economy is slowing down, in addition to the strong baht which affected Thai exporters and the dropping prices of farm products, such as para rubber, palm oil and sugar cane.

The Bank of Thailand might consider cutting the policy rate to stimulate spending and the Thai economy, he added.

Mathee Supapongse, Bank of Thailand's senior director for macroeconomic and monetary policy, said on Tuesday that private consumption and investment, which are the country's two main economic driving forces, contracted in March after commercial banks tightened consumer loans and farmers' incomes declined.

The Private Consumption Index contracted by 1.1% from the previous month, while the Private Investment Index shrank by 0.7% along with a slowdown in machinery and equipment investment after a period of acceleration.

"The Bank of Thailand will monitor whether the consumption slowdown will continue or if it is only temporary," said Mr Mathee said.

If the slowdown results from weak demand, it will need to be closely monitored, the central bank official said.

Meanwhile, Thai rubber free-on-board gained for a seventh session on Tuesday, rising 1.5% to 85.80 baht (US$2.93) a kilogramme, according to the Rubber Research Institute of Thailand.

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