Consumer sentiment declined for the first time in five months in January as consumers fretted about a spike in Omicron infections, the slow pace of the country's economic recovery and rising food prices.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday the consumer confidence index fell to 44.8 in January from 46.2 in December. It was 44.9 in November, 43.9 in October and 41.4 in September.
An index lower than 100 points reflects weak purchasing power from the slow economic recovery.
Thanavath Phonvichai, president of the UTCC, said people were concerned about rising Omicron infections, which affected people's way of life, businesses and tourism.
The abrupt suspension of the Test & Go scheme in December, the country's slow economic recovery, a sharp rise in the prices of goods and food, higher oil prices as well as rising political instability and a strengthening baht also weighed down consumer sentiment, he said.
"Consumers are more cautious about spending given the Omicron outbreaks and more expensive product prices," said Mr Thanavath. "The university is monitoring the Covid-19 infection rate as it may impact consumer confidence in February and the recovery pace of the Thai economy."
He said it is uncertain whether confidence will deteriorate further in the coming months, as Thailand still has positive factors to support the economy such as the fourth phase of the co-payment subsidy scheme and the resumption of the Test & Go scheme earlier this month.
The UTCC maintained its forecast for GDP growth in 2022 at 3.5-4%. It expects the Omicron outbreak to diminish by March and the number of foreign tourists to increase after the reopening of the Test & Go entry scheme.
Rising inflation pressure is expected to be temporary, according to the university, attributed to higher commodity and energy prices.
Mr Thanavath expects Thailand's inflation to increase by 2.5-3.5% in the first half, though the rates are unlikely to affect the overall economy or pressure the Monetary Policy Committee to raise its policy interest rate. Inflation will remain within the target range of 1-3% this year, he said.
Mr Thanavath said the escalating conflict between Russia and Ukraine warrants monitoring. If the situation eases soon, global crude oil prices are unlikely to exceed $100 per barrel, though prices are expected to outpace $120 per barrel if the conflict escalates.
In a related development, the UTCC announced the Thai Chamber of Commerce's confidence index, which gauges the sentiment of the business sector and chamber members in all provinces. The index declined to 37.2 in January from 37.8 in December, driven by worry over Covid-19, higher prices and baht appreciation.