The recent minimum wage hike should have a mild impact on inflation, according to the Commerce Ministry.
Citing analysis of the impact of the minimum wage increase on headline inflation, Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office, said the recent hike would raise inflation by 0.15% to 0.30%, keeping the rate within a range of 0.3-1.3% for 2025.
The study classified goods and services influenced by the minimum wage change into six groups.
The first group consists of goods and services regulated by the government, representing 22% of the weight in the inflation basket. This category includes essential utilities such as water and electricity, energy costs, educational expenses, expressway and public transport fares, and healthcare expenses.
As state regulations govern the prices of these items, the wage hike is unlikely to result in increased costs for this segment.
The second group is industrially produced goods and services that are used daily, which make up 25% of the inflation basket. This covers items such as cooking ingredients, non-alcoholic beverages, personal care products and durable goods.
These items are primarily manufactured in factories equipped with advanced technology, relying less on labour. Price changes in this category are less likely to occur based on the minimum wage hike.
Goods in the third group depend heavily on labour, but have a limited ability to transfer costs to consumers based on market supply and demand. These goods comprise 22% of the inflation basket, including fresh vegetables, fruit, field crops and livestock.
The impact of the minimum wage hike on this group is expected to be minimal.
The government should issue policies to support this category as it may struggle with net income reductions, said Mr Poonpong.
The fourth group's goods and services are highly vulnerable to wage changes, with the items accounting for 16% of the inflation basket. This group includes ready-to-eat food that is labour-intensive, mostly produced by small businesses with limited capacity to absorb rising costs.
However, other costs for ready-to-eat food in 2025 are anticipated to decline, such as lower fresh vegetable prices. This means the wage change should have a minimal effect on this category, according to the study.
The fifth group is housing rental costs, which account for 14% of the inflation basket.
Changes in rental costs depend on supply and demand rather than minimum wage changes.
The real estate sector's slow recovery this year is expected to keep rental costs stable, with minimal impact from wage increases.
The sixth group's services require skilled or trained labour, accounting for 1% of the inflation basket.
These include fees for haircuts, electricians, plumbers, construction workers, elderly care and patient caregivers.
As wages in these professions are already above the minimum level, the minimum wage hike is unlikely to increase service fees, according to the study.