The cabinet on Tuesday approved a 10% increase in the domestic price of sugar, raising the cost to consumers by about two baht per kilogramme.
Commerce Minister Phumtham Wechayachai said the price increment took immediate effect. It was limited to two baht per kilogramme, not the four baht sought by the Cane and Sugar Board.
The maximum approved retail price for granulated white sugar is 19 bath/kg and 20 baht/kg for refined white sugar.
The extra two-baht would cover the rising cost of farm production. The cabinet rejected the additional two-baht increment, which would have gone to an environmental fund, he said.
It was unfair for consumers to bear the fund contribution alone. Officials would consider which parties should share the responsibility for environmental impacts related to sugar production, Mr Phumtham said.
"Now we must solve the immediate problem, to protect farmers and also to control sugar prices and help the public," said the commerce minister, who is also a deputy prime minister.
Officials would formulate measures to prevent domestic sugar shortages, he said.
Shady exporters have been accused of smuggling sugar out of the country to capitalise on higher prices in global markets.