Thai Inflation In 2008 Unlilkely To Exceed 4.5%

[Old Man River]

Bank of Thailand wants to base their inflation forecasts on headline inflation from now on. They think core inflation is meaningless in the current situation as it excludes food and energy prices. Apparently Thailand is the only Asian country that still uses core inflation as a main indicator.

No wonder they get such rosy outlooks. 4.5% a month is more like it.

The Bank of Thailand clearly discloses both Core and Headline inflation on the Home Page of its website (i.e. the data is not hidden). As of April, Core inflation was 2.1% and Headline was 6.2%. You can find the link here:

http://www.bot.or.th/English/Pages/BOTDefault.aspx

The BOT's focus will remain on Core inflation as this measurement reflects the type of inflation that a Central Bank's policies can impact. Headline, which is based on external factors (food and energy prices), is more important to governments and its voting base. Hence, as normal, the Finance Ministry (government) will continue to make unbelievable inflation predictions while the BOT will continue to implement policies to try and keep Core inflation at bay (while openly disclosing both types of inflation on its website).

I am completely confused as to what measure the Finance Minister is using when it discusses the 4.5% inflation rate, given the BOT is openly disclosing Headline as of April at 6.2%. It is sad to say, but I really do expect that the PPP believes that its voting base (the northeast) either will not understand the difference or even worse, just doesn't care.

[astral]

No, Vegas Vic, the opening post begins, "BANGKOK: -- Despite soaring oil prices coupled with a rising cost of living, Thailand's Ministry of Finance is optimistic that the average rate of inflation this year will not exceed the 4.5 per cent level projected earlier, a senior ministry official said on Monday." That is annual. A monthly increase of 4.5%, compounded, is 69.6% annually.

Both Thai ministers and newspaper reporters are renowned for getting things muddled,

so a 4.5% monthly figure may be what was really meant.

After all oil prices have already way outstripped the 4.5% annual figure

and just about everything relies on oil for transport or production.

Also rice prices have doubled in the last year, according to this post. http://www.thaivisa.com/forum/index.php?showtopic=185041

[plachon]

The article seems to be referring, part of the time, to what a police fiscal officer is saying. Would you trust a police official to retun you stolen car or motorbike, much less speak on the issue of inflation? Must have sent a rookie out to interview this person as a new hire joke.

It was just a sloppy typo - they meant Fiscal Policy Office. Nowt to do with cops, although their understanding of fiscal matters is probably on a par with this lot.