BANGKOK, Sept 1 – Thailand’s Consumer Price Index (CPI)–the inflation rate—rose to 113.23 per cent in August, a 4.29 per cent increase year-on-year, and the highest in 35 months, Yanyong Puangrach, Permanent Secretary for Commerce announced on Thursday.
He said the increase is deemed appropriate for the current economic conditions.
The rise in the inflation rate resulted from increased prices for food and beverages of 8.43 per cent.
The price index of rice, starch, and flour products rose 1.93 per cent, meats by 13.76 per cent, and eggs and dairy products by 4.95 per cent. Pork in August remained high at 150-160 baht per kilogramme but dropped slightly at the month end.
The CPI in the first eight months was up 3.72 per cent, compared to the same period last year.
The permanent secretary for commerce is confident that the inflation rate for the whole year could be within the range of 3.2-3.7 per cent as projected due to the suspension of contributions to the State Oil Fund which will help ease cost of living.
Although the cuts in fuel prices have yet to make significant change in the price of consumer goods, but it helped reduce the cost of living for transport, which will contribute to a last quarter drop in the inflation rate by 0.9 per cent. It is projected that the fourth quarter to stay around 3.6 per cent on average.
Regarding the government’s policy to raise the daily minimum wage to 300 baht, it will in theory not impact inflation because it will not cause much more spending by the public. One per cent wage raise will affect inflation by 0.08 per cent in one year.
In addition, the rice mortgage scheme will slightly affect inflation. If rice prices edge up by one per cent, it will result in an increase of inflation by only 0.02 per cent but if rice prices rise by 50 per cent, inflation rate will move up by about one per cent.
However, if domestic rice prices increase, the government is ready to provide bagged rice at lower prices than the market price to the public under the “blue flag” project and will strictly control the capital cost of rice production.
High rice prices will cause bagged rice prices from the new crop season to rise. Bagged rice sold in the market currently is from old stocks with a lower capital cost.
Amid concern that Thailand’s rice mortgages will lead to higher rice prices in the global market and will affect inflation in trade partner countries, the permanent secretary for commerce asserted that overall rice prices will not increase considerably and it will have only a slight impact on inflation. He said it is unfair that farmers earn less income to export rice at low prices to rich countries.