Inflation To Rise By Year-end

[george]

Inflation to rise by year-end

BANGKOK: -- The Commerce Ministry sees inflation this quarter passing last year's level for the first time this year as gross domestic product and oil prices continue to rise.

"Inflation should grow 2 per cent for the remaining months on average. Increasing fuel costs and the recovering economy will drive up the inflation rate," Pimpapaan Chansilpa, deputy permanent secretary, said yesterday.

The ministry reported that the consumer price index in September dropped for the ninth straight month, by 1 per cent year on year, due mainly to lower fuel and transportation costs.

However, month on month, inflation increased by 0.2 per cent from August on higher food and consumer goods prices. Inflation in the first three quarters fell 1.7 per cent year on year.

The inflation rate is expected to turn positive this quarter following the hike in oil prices and the government's budget spending to stimulate the economy, she said.

The rise in the price level has prompted the ministry to reaffirm its forecast for the annual inflation rate at between minus 1 per cent and 1 per cent.

The full-year forecast assumes Dubai crude oil at US$50 (Bt1,700) to $60 per barrel throughout this year, while the average oil price in the first nine months was $57.19.

The exchange rate was predicted at Bt35-Bt36 against the US dollar, while the average exchange rate in the first nine months was Bt34.63.

Pimpapaan said that although inflation dropped in all of the last nine months, this does not mean Thailand is falling under deflationary pressure, as consumer product prices did not retreat.

The prices of only 89 products from the total of 417 products in the ministry' s inflation calculation basket were down, she said, adding that core inflation had been lower for only five straight months.

Core inflation, which excludes volatile food and energy prices, slid only 0.1 per cent year on year in September and edged up 0.1 per cent from August. Core inflation in the first ninth months of the year warmed up by 0.4 per cent.

Core inflation should also increase slightly in the remaining months, which would reassure the market that Thailand was not facing deflation.

Inflation next year should move higher in positive territory in line with the upturn in the economy and public spending, she added.

-- The Nation 2009-10-02

[andyc2006]

I'd take the other side of that bet.

Oh wait, I already have.

[rogercw]

I see the Thai government does the same phoney thing the American government does. Instead of calculating "inflation" they calculate "core inflation" by ignoring food and energy prices. These are a huge amount of living costs for the lower end of the income scale in any country.

[hhgz]

"These are a huge amount of living costs for the lower end of the income scale in any country."

That's right, because rich people neither eat not drive cars.