Aug headline inflation dips for first time in 5 months on subsidies

Aug headline inflation dips for first time in 5 months on subsidies

People flock to the food court of the Seacon Square shopping centre in Bangkok's Srinakarin area on Wednesday after dine-in is allowed. Government subsidies have contributed to a surprise drop in headline inflation. (Photo: Somchai Poomlard)
People flock to the food court of the Seacon Square shopping centre in Bangkok's Srinakarin area on Wednesday after dine-in is allowed. Government subsidies have contributed to a surprise drop in headline inflation. (Photo: Somchai Poomlard)

Thailand's headline consumer price index (CPI) unexpectedly dropped for the first time in five months, down 0.02% in August from a year earlier, due mainly to government subsidies, the commerce ministry said on Monday.

The reading compared with a forecast for a rise of 0.34% in a Reuters poll and followed July's 0.45% increase.

The CPI was dragged down by government measures to lower living costs, particularly a subsidy on tuition fees and utility bills, as well as lower prices of some food items, the ministry said.

Without the measures, the headline CPI would have risen more than 1%, ministry official Wichanun Niwatjinda told a briefing on Thursday.

"If the measures are extended until December, monthly inflation will be negative until the end of the year. If not, it will be positive," he said.

The government is likely to continue providing subsidies along with relief measures as the country struggles with the biggest wave of coronavirus infections.

However, headline inflation might not reach 1% this year, versus a current forecast of 0.7% to 1.7%, Mr Wichanun said.

In August, the core CPI index was up 0.07% from a year earlier, below a forecast for a 0.18% rise.

In the January-August period, headline CPI rose 0.73% from a year earlier, with the core measure of CPI up 0.23%.

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