Thai Inflation Edges Higher

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Thai inflation edges higher

BANGKOK, February 1, 2011 (AFP) - Thai inflation rose marginally in January from a year earlier, data showed Tuesday, after the central bank hiked interest rates in the month to dampen rising prices.

Consumer prices, driven by rising food costs, were 3.03 percent higher compared to the same period last year, after a 3.0 percent gain in December, the commerce ministry said.

"This shows that the Thai economy is growing with stability," it said in a statement.

The figure comes after the Bank of Thailand in January raised interest rates to 2.25 percent, the fourth increase in six months, citing the inflation risk and solid economic growth.

At the time, assistant governor Paiboon Kittisrikangwan said the economy was expected to grow robustly in 2011, citing buoyant domestic consumption and investment, supported by rising income and employment.

But the central bank has said inflationary pressures are expected to increase due to higher energy costs.

The commerce ministry maintained its prediction for an inflation rate of between 3.2 and 3.7 percent in 2011 on Tuesday, although this could be affected by volatile energy prices and exchange rate fluctuations.

Interest rates were raised for the first time in almost two years in July 2010 as the economy recovered from the global financial crisis and the fallout from deadly political unrest at home.

The Thai economy remained relatively resilient in the face of violence in Bangkok in April and May of last year and observers believe it remains on a broad recovery path, notwithstanding a recent soft patch.

The economy slipped back into technical recession with a second straight quarterly contraction in the three months to September last year, hit by a strong baht and a slowdown in US and European economic growth.

Direct foreign investment in Thailand fell by almost a third last year, the Board of Investment announced in January, although it said robust results were expected in 2011.

-- (c) Copyright AFP 2011-02-02

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