Thai Inflation Picks Up In December

[webfact]

Thai inflation picks up in December

BANGKOK, January 4, 2011 (AFP) - Thailand's inflation accelerated in December as energy and food prices increased, data showed Tuesday, raising expectations of further interest rate rises by the central bank to prevent overheating.

Consumer prices were 3.0 percent higher in the month compared with a year earlier, after a 2.8 percent gain in November, the commerce ministry reported.

For the whole of 2010, prices rose 3.3 percent, in line with expectations.

The ministry predicted an inflation rate of between 3.2 and 3.7 percent in 2011, although volatile energy prices and exchange rate fluctuations might affect the outcome.

Although inflation is not a major problem, the central bank is likely to continue raising interest rates to more normal levels, said Thanavath Phonvichai, an economist at the University of the Thai Chamber of Commerce.

"I think the Bank of Thailand will gradually raise its rate by at least one percent this year," he said.

The central bank lifted interest rates three times last year, mostly recently in December with a quarter-point increase to 2.0 percent.

Like many other countries, Thailand slashed borrowing costs during the global economic crisis which erupted in 2008.

The Thai economy remained relatively resilient in the face of deadly political violence in April and May of last year, but it has not been immune to a slowdown in US and European economic growth as well as a slumping dollar.

The economy slipped back into technical recession with a second straight quarterly contraction in the three months to September of last year.

The Thai baht, along with other Asian currencies, has been surging against the greenback, hitting a 13-year high. A stronger currency undermines the competitiveness of Thai exports.

-- (c) Copyright AFP 2011-01-04

[lannarebirth]

Anyone who purchases anything in Thailand will know prices are at least as high as claimed in the article. Many of the items my wife regularly purchases are 30% - 50% higher than only a year ago. I'm not sure why.

[Ricardo]

Add in the effects of the stronger Baht, which will inevitably result, from continuing increases in Thai interest-rates.

[Chunky1]

as always, government inflation #'s are total bs. anyone who spends money here knows that. 3%... 5555

just another global inflationary bubble waiting to burst.

[TAWP]

Inflation is the hidden taxation on the poor.