Headline inflation is expected to remain stable or tick up slightly this month as fuel, electricity and cooking gas prices remain at high levels.
Domestic demand may increase based on economic stimulus measures rolled out by the new government, while the severe drought conditions in many countries reduce agricultural and livestock production, resulting in higher prices for food and related products.
However, Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said factors related to the new government's measures for the short term could significantly impact inflation.
These include cost-of-living reduction schemes and factors trimming costs for manufacturing and services, such as a cut in mass transit system fares, oil prices, electricity prices and cooking gas prices. If these measures are implemented quickly, they could help reduce inflation, he said.
In addition, political conflicts could affect inflation if they intensify, so monitoring of the situation is needed, said Mr Poonpong.
The Commerce Ministry reported on Tuesday headline inflation, gauged by the consumer price index (CPI), was 0.88% year-on-year in August, accelerating from 0.38% year-on-year in July and 0.23% in June.
The uptick was mainly attributed to rising prices in the energy sector, while fresh food, meat and food components have decreased in price.
He said non-food and beverage prices increased by 0.98% year-on-year in August, driven by rising prices for transport and communication, especially fuel prices that gained in line with global market prices, with the exception a dip in diesel prices.
In addition, the cost of public transport, such as minibuses, motorcycle taxis and airfares increased because of rising costs, along with higher electricity costs, cooking gas prices, personal care products (talcum powder, tissues and toothpaste), hairdressing for men and women, and medicine (pain relievers and fever reducers), which remained at high levels compared with last year.
The prices of food and non-alcoholic beverages increased by 0.74% from August last year.
Key products posting price increases included eggs and dairy products (chicken eggs, fresh milk and soy milk), as well as fresh vegetables and fruit (lemon, ginger, garlic, longan, watermelon and oranges) because of volatile weather conditions that led to lower output.
Non-alcoholic beverages, glutinous rice and finished food also registered price increases, according to the ministry.
Core inflation, which excludes volatile food and energy prices, was 0.79% year-on-year in August, decelerating from a 0.86% increase in July and a 1.32% increase in June.
For the first eight months this year, headline inflation was 2.01% and core inflation was 1.61%.
The Commerce Ministry is maintaining its headline inflation target at 1-2%, with an average of 1.5% for 2023.