Thailand and inflation

[BillStrangeOgre]

Hi, I have a question that has been on my mind for sometime now. How is it that prices don't seem to rise as fast here in Thailand as they do back home (UK)?

I exclude rent, which I know works to a different dynamic everywhere than general inflation and relies solely on local market conditions. My rent here hasn't risen in 2 years. Goods and services however are linked to the world economy.  

The west has been ravaged by inflation recently that doesn't seem to be the case in Thailand. Prices in the supermarket for example have been flat, in my experience over the past 2 years. I don't buy too many imported goods, I really don't need them. I try to buy local which is always cheaper anyway.

As I'm writing this I'm thinking perhaps it's because Thai farmers and producers can supply demand but surely they are not immune to external factors. 

Be interested to hear others opinions

 

[Gsxrnz]

The main reason is that the Thai political system is not socialist. It may be inefficient, it may be corrupt, but they don't have a policy of wealth redistribution by rampant and excessive taxation.

 

Definitely corrupt, but by and large the lower 80% are not overly affected by the Hiso shenanigans. It has the effect of making much of the domestic economy somewhat stable and less prone to government fuelled spending causing inflation.

 

It's a much bigger answer than that, but essentially it's Socialist policies that is causing inflation in the West. 

[Gaccha]

USA 'created' 10 trillion dollars (quantitative easing), such as direct stimulus cheques, and the UK 'created' 1.2 trillion pounds, such as the furlough process, during the pandemic.

 

There is no such thing as a free meal. That money had to be paid back. Inflation is a type of (non-consensual) tax. 

 

Thailand by contrast created almost no free money. There were only trivial stimulus packages, hence the horrifying poverty that became visible on the streets in late 2021 and 2022. But it has paid off with little inflation today.

[BillStrangeOgre]

20 minutes ago, Gsxrnz said:

The main reason is that the Thai political system is not socialist. It may be inefficient, it may be corrupt, but they don't have a policy of wealth redistribution by rampant and excessive taxation.

 

Definitely corrupt, but by and large the lower 80% are not overly affected by the Hiso shenanigans. It has the effect of making much of the domestic economy somewhat stable and less prone to government fuelled spending causing inflation.

 

It's a much bigger answer than that, but essentially it's Socialist policies that is causing inflation in the West. 

 

I get that but socialism doesn't necessarily mean inflation. I quite possible to have socialist policies and not have rampant inflation. Look at the Scandinavian countries. I'm not a socialist by the way.

As you say there's more to it but a good point, linking government fuelled spending causing inflation

[BillStrangeOgre]

21 minutes ago, Gaccha said:

USA 'created' 10 trillion dollars (quantitative easing), such as direct stimulus cheques, and the UK 'created' 1.2 trillion pounds, such as the furlough process, during the pandemic.

 

There is no such thing as a free meal. That money had to be paid back. Inflation is a type of (non-consensual) tax. 

 

Thailand by contrast created almost no free money. There were only trivial stimulus packages, hence the horrifying poverty that became visible on the streets in late 2021 and 2022. But it has paid off with little inflation today.

 

Yeah. Also all that 'free money' doled out during covid in the west, much of which was saved and then fuelled a boom when lockdowns were relaxed. I remember shipping rates (a precursor to inflation) sky rocketing post covid.

[Gaccha]

We can see the astonishing increase in the money supply here (for the economists among you, you can see this is the M2 supply):

 

 

We can then contrast with Thailand's very gentle increase in money supply:

 

 

...which we can also show by the rate of change: 

 

 

If you spent the pandemic in the West and then came to Thailand after the pandemic you would have missed the stoic suffering of high unemployment, debt and homelessness that occurred at the time. But you are now enjoying the benefits of it.

[BillStrangeOgre]

7 minutes ago, Gaccha said:

We can see the astonishing increase in the money supply here (for the economists among you, you can see this is the M2 supply):

 

 

We can then contrast with Thailand's very gentle increase in money supply:

 

 

...which we can also show by the rate of change: 

 

 

If you spent the pandemic in the West and then came to Thailand after the pandemic you would have missed the stoic suffering of high unemployment, debt and homelessness that occurred at the time. But you are now enjoying the benefits of it.

 

Yeah, this makes sense to me as an explanation. Not committing myself to agree or not with the Thai governments policies though.

 

Plenty more QE coming down the pipeline as well. Indebted countries have no other option or go bust 

[bkk6060]

I disagree there certainly has been inflation here equal to western countries.  But, you don't notice it as much.  Things that use to be 40b are now 50.  Use to be 50 now 60 or 70b.

That is nothing for most of us but in reality it is 10 to 20% higher.

 

Things such as chicken, pork, veggies and fruits seem to be higher in places like Macro for sure.

[BillStrangeOgre]

1 minute ago, bkk6060 said:

I disagree there certainly has been inflation here equal to western countries.  But, you don't notice it as much.  Things that use to be 40b are now 50.  Use to be 50 now 60 or 70b.

That is nothing for most of us but in reality it is 10 to 20% higher.

 

Things such as chicken, pork, veggies and fruits seem to be higher in places like Macro for sure.

 

Interesting point. I thought about this too. A small increase of 5-10bht would go unnoticed to 'wealthy' farangs but obviously not to poorer Thais. But as I said earlier, I shop like a local as much as possible, I enjoy the markets etc and while there have been some increases prices haven't increased as much as they have in the 'west' 

Another point to consider is that Thai vendors often reduce the size of an item on sale (where possible) rather than increase the price. maybe that hides inflation to some degree

[angryguy]

Shrinkflation is a bigger problem. They all give you alot of rice and little to no meat and veg anymore

[stupidfarang]

44 minutes ago, BillStrangeOgre said:

 

Yeah. Also all that 'free money' doled out during covid in the west, much of which was saved and then fuelled a boom when lockdowns were relaxed. I remember shipping rates (a precursor to inflation) sky rocketing post covid.

Shipping rates increased after covid due to lack of containers and also containers not being in the right place at the right time creating bottlenecks in world shipping. The free money, are you refering to the Job retention scheme? that was free money to help buissnes to keep their staff and pay them, cannot remember the percentage. The Bounce Back loans were loans given by banks and gaurennteed by the government to be paid, most business have or are paying the money back. There were grants given to some companies and I think this is an area the gov got it wrong, I know of one charity that got over £800,000 (they run events) and like a lot of charitys the management get huge pay packets, imo I think they should not of got the money. Also some of the people in government (baroness Michelle Mone comes to mind) at the time set up companies and started selling NHS protective clothing and masks etc for millions, they should have been taken to court and jailed as they robbed the NHS and tax payer of money.

[BillStrangeOgre]

48 minutes ago, stupidfarang said:

Shipping rates increased after covid due to lack of containers and also containers not being in the right place at the right time creating bottlenecks in world shipping. The free money, are you refering to the Job retention scheme? that was free money to help buissnes to keep their staff and pay them, cannot remember the percentage. The Bounce Back loans were loans given by banks and gaurennteed by the government to be paid, most business have or are paying the money back. There were grants given to some companies and I think this is an area the gov got it wrong, I know of one charity that got over £800,000 (they run events) and like a lot of charitys the management get huge pay packets, imo I think they should not of got the money. Also some of the people in government (baroness Michelle Mone comes to mind) at the time set up companies and started selling NHS protective clothing and masks etc for millions, they should have been taken to court and jailed as they robbed the NHS and tax payer of money.

 

True and bottlenecks cause supply shocks and knock on spikes in inflation. This situation persisted for a long time post covid.

The free money I was talking about relates to everything governments did fiscally during covid. Economies were disappearing overnight. Massive financial stimulus packages were agreed for everything from salaries, businesses, banks, healthcare etc.

We are now beginning to pay for it 

[SAFETY FIRST]

3 hours ago, BillStrangeOgre said:

Thailand and inflation

 

prices don't seem to rise as fast here in Thailand 

20 years ago I could buy 3 big bottles of Chang beer for 100 baht from the local shop in Phetchabun 🍺

 

 

[Nick Carter icp]

3 hours ago, BillStrangeOgre said:

Hi, I have a question that has been on my mind for sometime now. How is it that prices don't seem to rise as fast here in Thailand as they do back home (UK)?

 

    UK;s inflation is because Labour raised taxes and increased minimum wage .

   Prices need to rise to pay for those tax increases 

[Lacessit]

There does not seem to be any price inflation in condos. Building costs for houses, and land prices have definitely increased.

[carlyai]

3 hours ago, Gsxrnz said:

The main reason is that the Thai political system is not socialist. It may be inefficient, it may be corrupt, but they don't have a policy of wealth redistribution by rampant and excessive taxation.

 

Definitely corrupt, but by and large the lower 80% are not overly affected by the Hiso shenanigans. It has the effect of making much of the domestic economy somewhat stable and less prone to government fuelled spending causing inflation.

 

It's a much bigger answer than that, but essentially it's Socialist policies that is causing inflation in the West. 

By socialist polices, do you mean increasing spending to look after the middle and low income earners?

[BillStrangeOgre]

13 minutes ago, Nick Carter icp said:

 

    UK;s inflation is because Labour raised taxes and increased minimum wage .

   Prices need to rise to pay for those tax increases 

 

Tax rises don't contribute to inflation. In fact they take money out of the system and slow the economy, therefore deflationary. Also mean the government can borrow marginally less.

[BillStrangeOgre]

34 minutes ago, SAFETY FIRST said:

20 years ago I could buy 3 big bottles of Chang beer for 100 baht from the local shop in Phetchabun 🍺

 

 

 

You're right but I was talking specifically about the post covid era.

[Nick Carter icp]

1 minute ago, BillStrangeOgre said:

 

Tax rises don't contribute to inflation. In fact they take money out of the system and slow the economy, therefore deflationary. Also mean the government can borrow marginally less.

 

   Raising the National insurance tax caused companies to raise their prices to pay the extra N.I tax .

   Raising prices causes inflation 

[Gaccha]

2 hours ago, bkk6060 said:

I disagree there certainly has been inflation here equal to western countries.

 

Not true versus UK. I suppose if you fish around enough you'll find Western countries that had very tight fiscal policies so they did not suffer inflation. 

 

You can see the stark difference below. Thailand even had negative inflation in 2020.

 

 

[BillStrangeOgre]

9 minutes ago, Nick Carter icp said:

 

   Raising the National insurance tax caused companies to raise their prices to pay the extra N.I tax .

   Raising prices causes inflation 

 Yes, the increased NI tax burden on companies has been passed on to consumer prices in many cases and that would be inflationary.

General taxation on salaries is not though.

[worgeordie]

When I first arrived here Petrol was 8 Baht a Ltr , you could buy a trolly full

of goods for 500 Baht at supermarket , that's what I call the good olde days,

 

The inflation rate the Government quotes is no way inline with my reality ,

especially any Farang imported foods , but I am sure cost of living is a lot

lower than in the West , 

 

I wish all these Youtubers going on about Thailand is expensive , tourists

numbers are way down ,would shut up , this is Teflon Thailand , they

always end up winning , been through 3-4 coups here ,nothing really

changes.

 

regards Worgeordie 

[HappyExpat57]

Simple macro economics - whatever the market can bear. The majority of Thai's make a barely liveable wage and can't afford things if the prices rise too quickly.