The Thailand Industry Sentiment Index (TISI) in April fell to 86.2 points from 89.2 in March due mainly to the global oil price surge, driven by the prolonged Russia-Ukraine war, and higher inflation.
The drop in the TISI came following its hike in March, the highest rise in 25 months, according to the Federation of Thai Industries (FTI).
"Factors that directly impacted industrial confidence are increasing production costs resulting from higher energy and raw material prices as well as expensive logistics costs," said Kriengkrai Thiennukul, chairman of the FTI.
Manufacturing in April also decreased as many factories were closed during long holidays to celebrate the Songkran festival.
Consumers are also in a gloomy situation. Many of them are facing huge household debt while others have seen their purchasing power dive amid higher rates of inflation.
Mr Kriengkrai called on the government to continue to boost consumer purchasing power through its stimulus programmes, including the fifth phase of the co-payment scheme and the extension of the "Rao Tiew Duay Kan" (We Travel Together) tourism promotion.
"The Thai economy needs a stimulus package to help reduce the people's cost of living," he said.
The April TISI was based on a survey of 1,320 enterprises in 45 industry clubs under the FTI.
Fuel prices are their biggest concern highlighted by 80.4% of respondents, followed by the pandemic (68%), the global economy (60.2%) and domestic economy (55.2%).
The FTI suggested the government set a ceiling price of diesel at 35 baht per litre for three months to minimise the impact on production costs after the authorities reduced their diesel price subsidy since earlier this month to relieve the financial burden on the state coffer.
According to the FTI, respondents said the ongoing baht-US dollar exchange rate is among the factors that are relieving concerns over the economic situation as a weaker baht against the US unit improves competition in the export market.