Consumers reluctant to spend
Prices continue to fall, but food edges up
Pui, 30, a civil servant with one child, is cautious with her daily spending, feeling that prices of consumer goods are still expensive despite low oil prices. She often buys only everyday products that are discounted.
"Forget luxury items," she said. "I no longer care about the brands. I'm ready to buy any brands that offer price cuts."
It appears Ms Pui is not alone, going by the latest statistics that show domestic consumption has remained weak.
Based on the latest report by the Commerce Ministry, consumer prices based on 450 products and services fell for an eighth straight month in August due mainly to prolonged weak consumption.
The ministry on Tuesday reported prices contracted by 1.19% year-on-year last month. That followed contractions of 1.05% in July, 1.07% in June, 1.27% in May, 1.04% in April, 0.57% in March, 0.52% in February and 0.41% in January.
On a month-on-month basis, headline inflation fell by 0.23% from July due mainly to non-food items and beverages falling by 0.39%. Food prices rose by 0.09%, mainly for fresh vegetables, fish, eggs and dairy products.
For the first eight months, headline inflation fell by 0.89% from a year earlier due largely to a decline in non-food items and beverages, down by 1.95%.
Prices of food and non-alcoholic drinks, however, increased by 1.1%, led largely by fruit and vegetables, seasonings and prepared foods.
Core inflation, which excludes volatile oil and food prices, managed to edge up in August by 0.89% year-on-year and 0.03% month-on-month.
In the first eight months, core inflation rose by 1.14% year-on-year, still within the central bank's target range of 0.5% to 3%.
Somkiat Triratpan, director of the ministry's Office of Trade Policy and Strategy, attributed the latest fall mainly to low energy prices and overall weak purchasing power in light of battered consumer confidence on poor economic prospects.
With oil prices expected to fall further after declining by 25% year-on-year last month, he said the ministry would revise down this year's inflation projection next month from between 0.6% and 1.3% now.
Of the 450 products and services used to measure the consumer price index, 148 had price increases, 111 had price drops and 191 were unchanged.
"The study found the prices of general products were cheaper due to lower production costs caused by lower oil prices," Mr Somkiat said. "But people are spending less due possibly to a lack of confidence in economic conditions, not because of actual deflation."
Mr Somkiat said the government's plan to inject 110 billion baht through new economic stimulus measures might not affect inflation much since each project was expected to yield fruit after three or four months.
Paiboon Ponsuwanna, an adviser to the Thai National Shippers' Council, urged the Commerce Ministry to look closely at market dominance and profiteering.
"We still find it unfair for consumers," he said. "With farm product and oil prices falling, consumers should have food at lower prices, but we still see food prices in general are higher."