Commerce Ministry to adjust annual inflation rate after CPI falls for 7th consecutive month

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BANGKOK, 3 August 2015 – The Commerce Ministry is to adjust the estimation of Thailand’s annual inflation rate currently standing at 0.6% – 1.3% as Thailand’s Consumer Price Index (CPI) fell for a seventh consecutive month in July, Director-General of the Trade Policy and Strategy Office Somkiat Trirattanapan revealed on Monday.

The upcoming revision is based on assumptions that Thai economy would grow around 3%-4% this year while Dubai crude oil price should stay around 50-60 US$ per barrel and Thai Baht exchange rate at 32-34 baht against the US dollar.

Last month’s CPI stood at 106.57, falling 1.05% for the seventh consecutive month. It caused a 0.85% decline in the inflation rate from the same period of 2014.

The contraction was the consequence of the steadily low fuel price, the worldwide sluggish economy and the weakness of Thai baht. These factors triggered the consumer spending downturn.

Food and non-alcoholic beverage prices rose by 0.41% due to higher prices of fresh vegetables such as cabbage, coriander and fresh chilli. Opposite situation occurred with non-food prices as the index shrank by 0.34%.

The Commerce Ministry anticipated that the inflation would remain at 0.5% – 0.6% in minus zone but the figure tends to rebound to positive zone in the fourth quarter of this year.

The ministry however confirmed no signs of deflation despite the ongoing inflation as 165 out of 450 consumer products are sold at higher prices. Only 84 products have their prices declined whereas prices of 201 remaining products stand the same. The falling prices of the products in general were driven by lower production costs.

“Less spending of consumers isn’t possibly based on the deflation but lack of confidence in Thai economy,” said Mr.Somkiat.