Inflation falls despite minimum wage rise
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Inflation falls despite minimum wage rise

Inflation in January eased from a 13-month high in December, indicating last month's nationwide minimum wage rise has made only a limited impact.

Commerce Ministry figures show annual headline inflation was 3.39% year-on-year last month, down from December's 3.63%, which was the highest since November 2011.

The ministry last month started using 2011 instead of 2007 as the base year for calculating inflation.

It also increased the number of consumer items to 450 from 417. The added items include fresh food, cooked food, natural gas for vehicles, interprovincial taxi vans, security guard payments and nursery costs.

Vatchari Vimooktayon, the commerce permanent secretary, said January inflation was driven by higher prices for vegetables, fruits, poultry, pork and rice.

On a monthly basis, consumer prices rose by 0.16% last month from December due largely to higher prices for fresh food and energy.

Core inflation, which excludes fresh food and fuel costs based on 312 products and services, was at 1.59% last month, down from 1.78% in December.

"Inflation this year should stay at about 3% on average," said Mrs Vatchari.

"The rate is based on an assumption that Dubai crude oil prices will stay at US$100-120 a barrel, foreign exchange at 28.50 to 32.50 baht to the US dollar and the government maintains measures to reduce living costs."

The ministry forecasts headline inflation of 3.3% in the first quarter, moving in a range of 2.8% to 3.4% for the whole of 2013. Inflation last year was 3.02%.

Inflation has been held down by government price controls and subsidies for some fuels and utilities, plus free public transport.

Mrs Vatchari said the strong baht has yet to affect inflation, as the currency is still moving in a range of 28.50 to 32.50 to the dollar, as expected.

Commerce Minister Boonsong Teriyapirom said the ministry next week will call a discussion with members of the Federation of Thai Industries and the Thai Chamber of Commerce regarding the baht's impact on exports.

He admitted a sharp appreciation of the baht would affect orders.

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