Inflation forecast revised

Inflation forecast revised

Range narrowed from 0.7-1.7% to 0.8-1.2%

The Commerce Ministry has revised its annual headline inflation forecast to a range of 0.8% to 1.2% (with an average of 1%), narrowing from 0.7% to 1.7% (with an average of 1.2%) earlier.

The latest projection is based on expected economic growth of 0.7-1.2%, with Dubai crude oil prices averaging US$65-70 per barrel, and an exchange rate of 31.5-32.5 baht per US dollar.

Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office, said the revised rate is appropriate and would effectively support the Thai economy.

"Unless there are any government measures on lowering the cost of living that significantly affect the prices of goods and services, the CPI in the fourth quarter of the year is projected to rise continuously from the previous quarter," said Mr Wichanun, attributing the rise to three major factors comprising higher energy prices; the easing of Covid-19 restrictions that will promote economic activity and baht depreciation which will affect manufacturing and logistics costs.

Meanwhile, the prices of some volatile raw food items, particularly rice, fresh vegetables and fruits, are expected to fluctuate in accordance with variations in the climate and natural disasters.

Nevertheless, the Covid-19 situation is also a major risk factor that can have a substantial impact on economic recovery and inflation which must be monitored, he said.

The ministry expects the inflation rate will expand in the range of 1.4-1.8% in the fourth quarter from the corresponding period last year.

The Commerce Ministry reported yesterday that the headline inflation had bounced back to rise by 1.68% year-on-year in September after a contraction of 0.02% in August, the first decline for five months.

Mr Wichanun said the headline inflation's rise in September was mainly due to the end of government measures on lowering the cost of living (electricity and water bills), and the continuously higher prices of gasoline.

Meanwhile, other prices were quite stable and moved in line with current production and consumer demand.

On a monthly basis, the CPI rose by 1.59% from August.

Core CPI, which excludes raw food and energy prices, rose 0.19% year-on-year in September, up from 0.07% in the previous month.

For the third quarter of 2021, the headline inflation rose by 2.36% year-on-year compared to the third quarter of last year and rose 0.74% quarter-on-quarter compared to the previous quarter this year.

For the first nine months this year, average headline inflation was 0.83% year-on-year and core inflation 0.23%.

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