Inflation At 10-year High

[george]

STATE OF THE ECONOMY

Inflation at 10-year high

May rate of 7.6 per cent forces BOT to revise its forecasts

BANGKOK: -- Thailand's inflation rate soared to 7.6 per cent in May, the highest in nearly a decade, due to the unrelenting rise of oil prices.

According to the Commerce Ministry, May inflation was the highest since August 1998, prompting the Bank of Thailand to announce it would revise its economic growth and inflation rate forecast for the year.

"The BOT will revise its forecast of economic indicators again as oil prices now have already surged higher than the worst-case scenario," BOT senior director Amara Sriphayak said.

The central bank forecast for GDP growth in 2008 is currently 4.8 to 6 per cent. The central bank also forecast headline and core inflation for this year at 4-5 per cent, and 1.5-2.5 per cent, respectively.

Amara said the inflation rate is a cause for concern as oil prices are rising continually. Currently, however, the central bank considers an equal risk between growth and inflation.

"Higher inflation and the rising cost of living because of oil prices makes people more cautious about spending money," Bloomberg quoted Kasikornbank president Prasarn Trairatvorakul as saying.

Consumer confidence, which fell for the first time in six months in April, may decline further in coming months as oil prices increase, said Thanavath Phonvichai, an economist at the University of Thai Chamber of Commerce.

According to Bloomberg, Indonesia's consumer prices rose 10.4 per cent in May from a year ago, while India's inflation has accelerated to its fastest pace in more than three and a half years.

The Thai government also asked four refineries controlled by state-owned PTT to cut diesel prices for six months to ease inflation.

"The ministry will look at all products to see what we can do to reduce the public's burden," Bloomberg quoted Commerce Ministry permanent secretary Siripol Yodmuangcharoen as saying.

The inflation rate in Thailand, Southeast Asia's second-largest economy, may be as high as 5.8 per cent this year, up from 2.3 per cent in 2007.

-- TNA 2008-06-03

[Boater]

hmm, will the min wage increase by 7.6 %...... i dont think so

[Martin]

Nothing surprising here.

There is, as yet, no fundamental reason for the situation in Thailand to get out of step with the rest of the developed countries of the world.

'Globalization' means what it says. All up together; all down together.

However, once the USA Presidential election is out of the way, protectionism sets in, globalisation (and industrialisation) start to contract and recessions really start to bite, things will be a bit different.

Fortunately, it is raining heavily (but not too heavily) as I type, and we have a promising start to this year's rice-growing season. When that fundamental comes back into its own..............

Inflation is an urban phenomenon only.

Remember what Prince Damrong wrote in 1906: "But in the whole tambon (sub-district) it is impossible to find one rich man with 200 baht or more stored away. Yet you cannot find a single person who is poor to the point of being another’s servant. They must have been like this for a hundred years. Because the villagers can farm to feed themselves without resorting to cash, the feeling that they need cash is not strong. Money does not have the same power as in the city which is called “civilized”. So nobody accumulates but you cannot call them poor because they feed themselves happily and contentedly."

There's inflation-proof, for you!!

Prices don't matter when there's nought you need to buy.

[OlRedEyes]

Remember what Prince Damrong wrote in 1906: "But in the whole tambon (sub-district) it is impossible to find one rich man with 200 baht or more stored away. Yet you cannot find a single person who is poor to the point of being another’s servant. They must have been like this for a hundred years. Because the villagers can farm to feed themselves without resorting to cash, the feeling that they need cash is not strong. Money does not have the same power as in the city which is called “civilized”. So nobody accumulates but you cannot call them poor because they feed themselves happily and contentedly."

There's inflation-proof, for you!!

Prices don't matter when there's nought you need to buy.

Poverty always appears romantic to the onlooker....

[PeaceBlondie]

I am no eeknowmist, I barely know the mist, and I ain't no prince. But I do think it is a bit silly to speak so much about "core inflation" when fuel and food commodity prices are rising skyward like a lamp at Loy Kratong. People use fuel and eat rice.

I doubt the US Presidential elections, or the USA, will save the world, or sink it. Neither did Communism.

[catmac]

Remember what Prince Damrong wrote in 1906: "But in the whole tambon (sub-district) it is impossible to find one rich man with 200 baht or more stored away. Yet you cannot find a single person who is poor to the point of being another’s servant. They must have been like this for a hundred years. Because the villagers can farm to feed themselves without resorting to cash, the feeling that they need cash is not strong. Money does not have the same power as in the city which is called “civilized”. So nobody accumulates but you cannot call them poor because they feed themselves happily and contentedly."

There's inflation-proof, for you!!

Prices don't matter when there's nought you need to buy.

Poverty always appears romantic to the onlooker....

Well said, OlRedEyes!

Just another anti-globalization dream of the whole world reverting to subsistence farming peasantry. Love to hear Martin telling the folks of "rural" Udon Thani that they've got to give up their motorbikes, tvs,mobile phones and all the other trappings of modern life. No more piped water or electicity either!

[Old Man River]

I am no eeknowmist, I barely know the mist, and I ain't no prince. But I do think it is a bit silly to speak so much about "core inflation" when fuel and food commodity prices are rising skyward like a lamp at Loy Kratong. People use fuel and eat rice.

Central banks fully understand the difference, but it is normal for them to discuss core inflation because this is the only type of inflation a central bank has some control over. It is the government that should be addressing headline inflation. Note, the BOT openly lists both core and headline on its website. There is no attempt to hide or confuse on their part.

[Scott]

I think the world has simply surpassed it's sustainability with regard to population. Not that it was sustainable before, but we've seemed to reach a sort of critical mass.

[Martin]

" It is the government that should be addressing headline inflation."

Many governments simply dare not 'address' headline inflation.

Where they employ big numbers of people as civil servants and similar 'public sector' employees, they are simply not getting in enough in taxes to pay wage and pension increases in line with headline inflation.

As to "...the folks of "rural" Udon Thani that they've got to give up their motorbikes, tvs,mobile phones and all the other trappings of modern life. No more piped water or electicity either!", the situation is far more promising for the rural folk to keep an adequate amount of the 'trappings of modern life'.

It is the folk in the cities who are much more trapped in by dependence on the artefacts of modern consumerism, and who are much more vulnerable to the ravages of inflation.

There is a tendency towards the extreme pessimism expressed in those words 'give up', as if there is a fear of going back to a level of 'goodies' of a couple of generations ago, or worse. But that is an over-reaction. There is no need to think that a bit of belt-tightening means starvation.

As an example, the world has been without civilian supersonic air transportation since 2003, but withdrawing Concorde was not the end of civilisation as we have known it. And a bunch of airlines going out of business this year hasn't been the collapse of the industry. There is a world of difference between contraction and collapse.

[midas]

I think the world has simply surpassed it's sustainability with regard to population. Not that it was sustainable before, but we've seemed to reach a sort of critical mass.

Agreed because even this number of people is damaging this fragile planet - god

help it with 9 billion in 2050

[Felt 35]

June 3 (Bloomberg) -- Malaysia's political volatility made its shares least favored in Southeast Asia, Goldman, Sachs & Co. said, recommending that investors also pare holdings in Thailand, Indonesia and the Philippines as growth and earnings slow.

The nations' equities were cut to ``underweight'' from ``market weight,'' Singapore-based analysts including Rick Loo wrote in a report dated yesterday. The region's shares are unlikely to rise as economic concerns escalate, they said.

In Malaysia, opposition leader Anwar Ibrahim is seeking to oust the ruling party, while Thailand's benchmark SET Index yesterday plunged the most since January on speculation anti- government protests and rising consumer prices will dent growth. Inflation will hurt the Philippines most and Indonesia faces a ``tighter fiscal and monetary backdrop,'' Goldman said.

``We are very cautious towards these economies because primarily of rising inflationary pressures coupled with renewed political tensions in some countries,'' said Daphne Roth, Singapore-based vice president of equity research at ABN Amro Private Bank, which oversees $20 billion of Asian assets. ``Inflation is definitely a concern for Southeast Asia.''

The countries are at risk of ``contagion'' from Vietnam's economic upheaval that slashed its benchmark index 57 percent this year, according to Goldman's report. Vietnam's stocks are the world's worst performers in 2008, tumbling on concern surging inflation and a widening trade deficit will lead to further monetary tightening.

The Philippine Stock Exchange Index slumped 1.5 percent today, its biggest loss in five weeks, while Indonesia's Jakarta Composite Index declined 1 percent. Malaysia's Kuala Lumpur Composite Index and Thailand's SET Index both fell 0.4 percent at the end of today's trading.

Dissenting Viewpoint

Investors should sell shares of PT Mobile-8 Telecom, an Indonesia mobile-phone company, and Siam Commercial Bank Pcl, Thailand's third-largest bank, Goldman said. The brokerage's ``buy'' recommendations include KNM Group Bhd., a Malaysian oil and gas services provider, and PT Perusahaan Perkebunan London Sumatra Indonesia, the nation's third-largest publicly traded plantation company.

Sophie Biro, a Hong Kong-based analyst at Credit Suisse Group, doesn't agree. Malaysia and Indonesia, along with China are the three most attractive markets this month in Asia, Biro wrote in a report today. The three least attractive on her list are Taiwan, Australia and Singapore.

Indonesia ``is not cheap but remains oversold,'' Biro wrote. Malaysia has ``attractive valuations.''

The Kuala Lumpur Composite, which fell 0.3 percent last month, is trading at 13 times estimated earnings, while the Jakarta Composite is at 14 times. Both are cheaper than the MSCI Asia Pacific Index's 16 times.

Inflationary Pressures

Earnings growth will slow in Thailand as a U.S.-led global slowdown damps exports, Goldman said. Thailand's central bank forecasts export growth at as little as 13.5 percent this year, from 18.1 percent in 2007.

The nation's stocks have lost 7.9 percent since anti- government protests began in Bangkok on May 25, triggering speculation last week that a coup was imminent.

``We don't see huge amounts of upside'' in Southeast Asia, said Allan Conway, who oversees about $28.5 billion as head of emerging markets at Schroder Investment Management Ltd. in London. Malaysia ``doesn't look particularly attractive given the poor earnings growth,'' and he may revise his ``overweight'' view on Thailand because of the political situation, he said.

`Most Severe'

Investors who want to put money into Indonesia should wait until the central bank starts cutting interest rates, Goldman said. Bank Indonesia lifted its key rate by a quarter of a percentage point last month, the first increase since December 2005. Inflation accelerated to a 20-month high in May, heightening expectations the central bank will need to raise rates further.

Earnings downgrades for the Philippines has been ``one of the most severe'' among countries in Southeast Asia, while inflation could derail momentum in domestic demand, Goldman said. Philippine inflation probably accelerated to the fastest in more than nine years in May on rising oil, transport and food prices, central bank Governor Amando Tetangco said on May 30.

``The high oil prices are eating into the current account surpluses of these economies and that could eventually lead to pressure on their own currencies and add to the inflationary risk,'' said ABN Amro's Roth.

To contact the reporter for this story: Kyung Bok Cho in Seoul at [email protected]; Ian C. Sayson in Manila at [email protected]

[Tony Clifton]

I think the world has simply surpassed it's sustainability with regard to population. Not that it was sustainable before, but we've seemed to reach a sort of critical mass.

I heard some talk on BBC or AL Jazeera today where they were saying that globally we need to produce more food. Seems overpopulation isn't their concern. No shortage of food here yet as wherever you are there's always someone chweing on something.

Edited June 3, 2008 by Tony Clifton

[Johpa]

Remember what Prince Damrong wrote in 1906: "But in the whole tambon (sub-district) it is impossible to find one rich man with 200 baht or more stored away. Yet you cannot find a single person who is poor to the point of being another’s servant. They must have been like this for a hundred years. Because the villagers can farm to feed themselves without resorting to cash, the feeling that they need cash is not strong. Money does not have the same power as in the city which is called “civilized”. So nobody accumulates but you cannot call them poor because they feed themselves happily and contentedly."

There's inflation-proof, for you!!

Prices don't matter when there's nought you need to buy.

The population of Thailand was around 8 million people during Damrong's days. The rural areas were still sparsely populated, one could still find decent land to farm, and the issue of landless peasantry had not yet arisen. Today, as for past past several decades, there are many who must purchase their rice as they no longer own padi land of their own. Although we have not seen too much hunger in the countryside, I expect that will change as the inevitability of the end of oil approaches. Inflation is only just beginning.

[cmsally]

I think the world has simply surpassed it's sustainability with regard to population. Not that it was sustainable before, but we've seemed to reach a sort of critical mass.

I heard some talk on BBC or AL Jazeera today where they were saying that globally we need to produce more food. Seems overpopulation isn't their concern.

This would have been referring to Ban Ki-moon's speech at the conference in Rome. He said we need to produce 50% more food by 2030

News BBC

[Tony Clifton]

That is insane. Wonder if the disappearing fish stocks are still part of that menu?

[OlRedEyes]

I think the world has simply surpassed it's sustainability with regard to population. Not that it was sustainable before, but we've seemed to reach a sort of critical mass.

Agreed because even this number of people is damaging this fragile planet - god

help it with 9 billion in 2050

Especially so seeing that we have managed to breed a generation of 'as much as possible for myself and to h_ell with the rest'.... seemingly unaware that what goes around comes around....

[sriracha john]

Inflation at 10-year high

May rate of 7.6 per cent forces BOT to revise its forecasts

According to the Commerce Ministry, May inflation was the highest since August 1998, prompting the Bank of Thailand to announce it would revise its economic growth and inflation rate forecast for the year.

The central bank forecast for GDP growth in 2008 is currently 4.8 to 6 per cent. The central bank also forecast headline and core inflation for this year at 4-5 per cent, and 1.5-2.5 per cent, respectively.

UPDATE with June figures... it's gotten even worse than the 10-year high....

Thailand Inflation Rate Jumps To 8.9% for June

Year-on-year inflation rose to 8.9% in June, ramped up by rising fuel and food prices, the Commerce Ministry said Tuesday.

June's consumer price index rose 1.2% above May, and was up 6.3% for the first six months of 2008, Commerce Ministry Permanent Secretary Pailah Sudsawang told a press conference.

In June, the main inflationary component was food and beverages, which rose 11.4 per cent year-on-year, she said.

Thailand is a net importer of oil and one of Asia's few net exporters of food.

Rising oil prices automatically mean higher crop prices because most Thai farmers rely on petroleum-based fertiliser and pesticides, as well as fuel for tractors and transport.

- DPA

[sriracha john]

Thailand's CPI in June up 8.9% year-on-year

BANGKOK, July 1 (TNA) -- Thailand's consumer price index (CPI) in June this year rose 1.2 per cent from May, but soared 8.9 per cent from a year ago, a senior commerce ministry official said Tuesday.

Deputy Permanent Secretary for Commerce Pairoh Sudsawang told a press conference that the average CPI during the first half of 2008 rose 6.3 per cent compared to the same period of 2007 due chiefly to volatility in oil prices.

Dubai crude price was taken into consideration as its price soared more than double in the past year. Its average price on June 30, 2008 rose to US$136.3 a barrel compared to US$65.7 a barrel on June 30, 2007.

Based on the assumption that average Dubai crude price is at US$105 a barrel, the Thai Commerce Ministry has projected that average CPI this year would be at 5.5 per cent, the same level estimated earlier by the ministry.

Mrs. Pairoh said her ministry had projected that the average Dubai crude price for the second half of 2008 would be at US$142 per barrel which means that its average for the entire year would be at US$120 a barrel, putting Thailand's CPI to stay at 7 per cent if the Thai baht is at Bt33 per US dollar.

The Commerce Ministry has no plan for the time being to adjust CPI as it believes that CPI would be at 5.5 per cent, she said.

Thailand's core inflation for June rose 0.9 per cent from May but was up 3.6 per cent from one year ago. Core inflation during the first half of 2008 advanced 2.2 per cent from the same period of last year due to higher prices of goods, prepared food, construction materials and bus fares.

[sriracha john]

Prices hit 10-year high

Inflation at 8.9% in June; possibility of 7% rate for the whole year

Consumer prices hit a 10-year high of 8.9 per cent last month, heightening anticipation the monetary authorities will soon take interest rates off cruise control and shift up a gear to dampen inflation expectations.

The Commerce Ministry said escalating oil prices helped push last month's inflation up to a level not seen since June 1998. With the world oil price pegged to soar to US$150 (Bt5,000) per barrel, the ministry has revised its oil-price base for inflation calculations from $105 a barrel to between $120 and $125.

"The ministry expects the average oil price will be $142 a barrel in the remaining months, which would drive inflation to 7 per cent for the year," deputy permanent secretary Pairoa Sudsawarng said yesterday.

Inflation in the first half shot up to 6.3 per cent, exceeding the ministry's whole-year target of 5.5 per cent.

"Inflation in June surpassed our expectations and market consensus only to firm up the chances for a policy rate outcome of a 50-basis-point hike when the Monetary Policy Committee meets mid-July," Jun Trinidad of Citigroup wrote in a report entitled "Thailand Economic Flash".

"We believe policy-makers may want to start rushing the adjustments to the policy-rate setting in view of the accelerating inflation momentum. Core inflation in June crossed 3.5 per cent, the high end of the Bank of Thailand's annual core-target range, a first since the Bank of Thailand adapted the inflation-targeting programme."

However, the Commerce Ministry remains optimistic the oil-price spurt may have run out of gas and that oil prices will not rise as expected in the remaining months, so it has left its annual target unchanged at 5.5 per cent for the year.

Oil prices averaged $103.80 a barrel in the first half, peaking at $136.50 late last month, compared with $65.70 in June 2007.

Pairoa said last month's high inflation rate was acceptable for the economy and in academic terms, because it was due mainly to the skyrocketing oil price, which affected all other countries.

In May, inflation peaked at 25.2 per cent in Vietnam, 10.4 per cent in Indonesia, 9.6 per cent in the Philippines, 8.2 per cent in India, 7.7 per cent in China, 7.5 per cent in Singapore and 3.8 per cent in Malaysia.

However, the heat-up in inflation may suffocate consumer sentiment as the cost of living goes up, but incomes remain stagnant, she said.

Prices of food and beverages increased 11.4 per cent last month, with flour jumping 35.8 per cent, pork 31.6 per cent and eggs and dairy products 11.1 per cent year on year.

Non-food and beverage prices increased 7.2 per cent, largely from the oil price increasing 44.7 per cent and transportation and communications costs rising 16.8 per cent.

Last month's core inflation, which excludes volatile energy and food prices, increased 3.6 per cent year on year and 0.9 percentage point from May.

Core inflation in the first six months of the year was 2.2 per cent.

- The Nation

[sriracha john]

Thai inflation hits new 10-year high

Thailand's inflation rate surged to a 10-year high of 8.9 percent in June, driven by sharply rising oil prices, the commerce ministry said Tuesday. Fuel prices in Thailand rose 44.5 percent year-on year in June, while food costs were up 11.4 percent, the ministry said in a statement.

But the overall increase in food prices masked a steeper rise in prices for the staple grain rice, which jumped 35.8 percent, while pork costs jumped 31.6 percent.

For the first half of the year, inflation was at 6.3 percent, due mainly to rising fuel costs, the ministry said. Thai inflation had already jumped to a 10-year high of 7.6 percent in May, and a central bank official warned Monday that the figure could reach double digits in July and August.

The inflation figures exceed Thailand's projected range of 5.0-5.5 percent for the year, and the commerce ministry warned that the forecast may have to be revised higher if global oil prices remain high. "We still maintain our projection for Thailand's inflation rate at 5.0-5.5 percent this year," the ministry's deputy permanent secretary Pairoa Sudsawarng told reporters. "But we may adjust the rate up to 7.0 percent if the oil prices remain over 120 dollars," he said.

The Bank of Thailand's monetary policymakers meet on July 16 to consider whether to raise interest rates to rein in inflation, amid growing expectations that rates will rise. The bank's benchmark rate has been unchanged at 3.25 percent since August.

The bad inflation news comes as confidence is already weakening in Thailand due to five weeks of protests against the government of Prime Minister Samak Sundaravej, whose election in December ended more than a year of military rule.

- AFP (today)

[Scott]

The economic news just keeps getting worse and worse. Other than a few places, I am guessing the global situation is going to be tumultuous in the short-term. Without belaboring the point, I think the world has reached a point of being unsustainable--as I had mentioned in an earlier post. There are just too many people to keep the lifestyle that most of us aspire to a reality. Oil is likely to remain very high for a long, long time and most the arable land is now used for agriculture.

Even when people talk about places like Thailand being able to feed themselves so no problem, what happens when there is a severe drought or severe flooding that causes a crop failure? These scenarios used to be a small blip on the economic radar screen, but are now likely to have more serious consequences.

At this point, in the food situation, China has experienced the big quake that has limited food production in the area and the floods in the Southern part of the country. The U.S. corn crop is also considerably reduced by flooding. These aren't going to help the situation.

[sriracha john]

The economic news just keeps getting worse and worse.

I agree, and very worrisome I think for the average Thai consumer are the specific areas where inflation has really skyrocketed, such as

Fuel prices in Thailand rose 44.5 percent year-on year in June, while food costs were up 11.4 percent, the ministry said in a statement.

But the overall increase in food prices masked a steeper rise in prices for the staple grain rice, which jumped 35.8 percent, while pork costs jumped 31.6 percent.

[sriracha john]

Central bank likely to raise interest rate to curb inflation

BANGKOK, July 2 (TNA) – The Bank of Thailand (BoT) is likely to raise the policy interest rate at its next meeting mid-month to cope with the country's rising inflation rate, according to a leading economic forecaster.

Thanawat Palavichai, director of the University of Thai Chamber of Commerce (UTCC) Economic and Business Forecasting Centre, said he believed the continued increase in the inflation rate would compel the central bank to raise the interest rate to ensure that the economy grows 5-6 per cent as targeted earlier for this year.

The interest hike would fuel production costs, he said, adding that the Ministry of Commerce might need to seek private-sector cooperation in keeping product prices unchanged to slow rising inflation.

The ministry reported that the Consumer Price Index (CPI) in June rose 1.2 per cent from May, but soared 8.9 per cent from a year ago, due to higher oil prices.

It said the average CPI in the first half of 2008 rose 6.3 per cent from the same period of 2007 due chiefly to volatility in oil prices.

[soundman]

Fuel prices in Thailand rose 44.5 percent year-on year in June, while food costs were up 11.4 percent, the ministry said in a statement.

I seem to recall diesal fuel being about 25B per litre this time last year. Now at around 43B per litre. Thats over 80% increase.

It appears the figures are massaged for public consumption as usual.

[sriracha john]

Thailand's inflation likely to hit double digits in August

BANGKOK, July 2 (TNA) – Thailand's inflation rate is likely to rise above 9 per cent this month and penetrate the double-digit 'ceiling' in August due to the continued rise in consumer product prices fueled by relentlessly rising fuel prices, according to the Kasikorn Research Center.

The leading think tank reported that the general inflation rate in June surged 8.9 per cent, somewhat higher than the 8.5 per cent forecast earlier by many analysts. It is the highest level in almost a decade.

The country's core inflation rate soared 3.6 per cent, Thailand's highest in almost 10 years. It is also the first time the rate stayed above the inflation target range of 0.0-3.5 per cent set by the Bank of Thailand.

KRC predicts that core inflation will exceed 4 per cent in August and stay higher at 4.5-5 per cent at the end of the year.

The issue will definitely be discussed by the Monetary Policy Committee on July 16 and at its subsequent meetings.

KRC believes that the prices of raw materials, particularly fuel, will continue increasing.

The global crude price is projected to move to US$150-170 per barrel during the remainder of the United States summer of the United States when oil demand is higher due to heavy air-conditioning demand and holiday travel.

At the same time, domestic fuel prices are expected to increase as the Thai government is due to reduce its subsidy. Also the prices of some commodities such as steel and natural rubber have room to rise further.

Given these factors, the producer price index in July might surge above 20 per cent, the highest in almost 30 years.

KRC said the substantial overhead costs of entrepreneurs might push up the consumer price index to 9 per cent in July and reach the double-digit level in August.

If that occurs, the index is likely to stay high in the range of 9 per cent in the remaining months of the year, resulting in the average inflation rate staying at 7.4-8 per cent for 2008.

[sriracha john]

A differing opinion from the medical doctor on the issue of the economy which differs from the economic think tank and the BOT and just about everyone else....

Thai Finance Minister: Double-Digit Inflation Unlikely This Year

BANGKOK - Thailand's Finance Minister Surapong Suebwonglee said Wednesday that double-digit inflation is unlikely this year as he believes the oil price will drop in the second half as speculative activity in the global energy market declines.

His view on inflation contradicts the central bank, which recently warned the public not to be surprised if inflation hit two digits in July and August due to a low base effect.

Headline inflation hit a fresh 10-year high in June of 8.9% and core inflation was 3.6%, exceeding the central bank's target range of zero to 3.5%.

The data reinforced market expectations that the central bank's Monetary Policy Committee will raise the policy interest rate at its July 16 meeting.

- Dow Jones Newswires

[TAWP]

Just a FYI, the amount of food in the world isn't an issue, the distribution is.

The world can sustain a much larger population than we are now...

[sriracha john]

Thai shares close lower on inflation fears

BANGKOK - Thai shares closed lower on Wednesday amid growing concern over rising inflation. Banking and property stocks led the decline, while volatile oil prices and worries about political instability added to the negative sentiment in the market. The Stock Exchange of Thailand (SET) composite index lost 8.58 points or 1.12 percent to close at 760.01 points.

Decliners outnumbered gainers 265 to 76 with 106 stocks unchanged, on turnover of 3.61 billion shares worth 12.87 billion baht ($385.12 million).

"The market fell today and trading was very thin as investors worried about rising inflation," said Wichai Lertsupongkit, senior vice president at Thanachart Securities. Pichai said Tuesday's commerce ministry report putting inflation at a new 10-year high of 8.9 percent in June was higher than expected.

"We now expect that the high inflation rate will drive the central bank to inevitably raise interest rates soon, by at least one percent over the next 12 months," he said. The central bank has kept its benchmark interest rate at 3.25 percent since August.

- AFP

Edited July 2, 2008 by sriracha john

[Scott]

TAWP, I have to both agree and disagree with you. I think the food problem is that we are now cutting food stocks too short and events such as the floods in the US and China can have a big impact on the cost of food. It doesn't really make a whole lot of difference if the food is out there is people can't afford to pay for it.

As we saw with the rice situation in Asia, suddenly people and gov'ts started hoarding it; preventing or limiting exports. This sort of stuff has both a real and psychological impact on people. It certainly affects costs. As for distribution, this is highly dependent on oil and that isn't getting any cheaper either. Then there's the cost of fertilizer and pesticides and irrigation systems etc.

Things are getting a lot tighter.

[cclub75]

A differing opinion from the medical doctor on the issue of the economy which differs from the economic think tank and the BOT and just about everyone else....

BANGKOK - Thailand's Finance Minister Surapong Suebwonglee said Wednesday that double-digit inflation is unlikely this year as he believes the oil price will drop in the second half as speculative activity in the global energy market declines.

At that point, it's a Pascal Wager.

It's their last card : a fall of oil prices.

And if it doesn't happen ?

I can't believe that intelligent people still believe that oil will go back to "50 USD per barrel", in a snap, thanks to God.

And even though oil prices are going down... other inflationary forces are at work...

We had the CPI in june a few days... but look at the PPI... +18,6 % !!!!!

http://www.price.moc.go.th/price%5Fe/

Businesses are going to continue to increase their prices... No escape.

And what about wages ? Have a look a this very interesting chart : wages of employees on Q1 are exploding !

So... Surapong can pray all he wants... he will loose... face and credibility.