FTI wary of oil price surge, baht
The Federation of Thai Industries (FTI) has asked the government to carefully deal with two key economic issues -- the global oil price surge and baht depreciation -- to avoid a greater burden on the pandemic-plagued economy.
Higher oil prices will increase production costs and the price of goods, while a sluggish economy will partly affect the baht's value, according to the FTI.
The Energy Policy Administration Committee resolved on Oct 4 to put a cap on diesel prices of 30 baht per litre starting today until the end of the month to help reduce living costs for consumers.
"Global oil prices are on the rise, which affects retail prices for oil and gas. The government should carefully deal with this issue," said Supant Mongkolsuthree, chairman of the FTI.
Average prices of Brent crude oil increased from US$69-74 per barrel in August to $77-82 per barrel on Oct 4.
West Texas and Dubai crude oil prices also experienced a similar trend.
The rise in oil prices will affect the prices of commodities, including sugar and rice, as their production processes and transport require oil as a fuel. If operation costs increase, the prices of products will go up, affecting consumers, said the FTI.
The pandemic is another major risk that must be monitored, said the federation.
"The FTI is concerned the baht will continue to weaken during the oil price surge and the Covid-19 outbreak," said Mr Supant.
If the government cannot reduce high infection rates, its plan to restore the economy will face a setback, he said.
The baht is currently the weakest currency in Asean, partly because the country's tourism industry and overall economy are struggling to recover, according to the FTI. Yet many businesses are worried the baht will fall to 30-31 to the US dollar, and would prefer to see it stay around 33 baht, said Mr Supant.