Inflation increased by 0.35% in August, driven by rising prices of fresh vegetables and fruit as a result of production areas damaged by floods.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office (TPSO), said headline inflation in August rose by 0.35% year-on-year because of rising food prices, especially fresh vegetables and fruit as flooding affected some agricultural areas and decreased crop yields.
In addition, the prices of rice, glutinous rice and ready-to-eat meals increased.
As for other goods and services, their prices moved in a normal direction, he said.
The consumer price index (CPI) in August compared with July increased by 0.07% month-on-month, largely attributed to a 0.79% gain in the food and non-alcoholic beverages category.
The average CPI over the past eight months rose by 0.15% year-on-year.
Core inflation (excluding fresh food and energy) increased by 0.62% year-on-year, with the figure for the first eight months of the year averaging 0.44%.
As for September, the TPSO predicts headline inflation will rise based on three key factors.
First, the price ceiling for diesel of 33.00 baht per litre is higher than the same period last year as the government terminated the support measure.
Second, the impact of flooding has caused the prices of fresh vegetables and fruit to rise as some agricultural areas are damaged, though this is expected to be a short-term effect.
Third, geopolitical conflicts may create uncertainty in the prices of key commodities, including an increase in freight and shipping costs, according to the TPSO.
However, Mr Poonpong said some factors could temper inflation, such as the price of electricity declining year-on-year based on government measures and intense competition among large-scale wholesale and retail traders.
Other factors include the growth of e-commerce, leading to the adoption of trade promotion policies, particularly continuous price reductions, he said.
Furthermore, the base price of Dubai crude oil in 2023 was higher than the current price, as oil prices slowly recover based on sluggish global economic growth, said Mr Poonpong.
"The digital wallet scheme will not increase inflation, but is expected to lift household purchasing power," he said.
For the fourth quarter, the TPSO predicts headline inflation of 1.5% on average, attributed to rising crude oil prices globally and the termination of the government's support measures for fuel and electricity prices.
The Commerce Ministry predicts headline inflation this year will fall within a range of 0.0% and 1.0% (averaging 0.5%), aligning with current economic circumstances.
Thailand's inflation rate in July 2024, which increased by 0.83% year-on-year compared with other countries, put Thailand in the low-inflation group, positioned at 10th out of 128 economies that reported figures.
Thailand had the second-lowest rate among Asean member nations.