Thai Inflation Up Marginally In July

[webfact]

Thai inflation up marginally in July

BANGKOK, August 1, 2011 (AFP) - Thailand's inflation edged up marginally in July, government data showed on Monday, but analysts warned populist policies from the incoming government could stoke price pressures in future.

The consumer price index rose 4.08 percent last month from a year earlier -- mainly owing to higher food and oil prices -- compared with a 4.06 percent rise in June, the commerce ministry said.

Although this was slightly lower than market expectations, economists believe the Bank of Thailand will further hike its policy interest rate, which it raised mid-July for the fifth time this year.

The bank increased the cost of borrowing to 3.25 percent, from 3.0 percent, warning that pledges from the election-winning Puea Thai party, such as a minimum wage hike, could fuel inflation.

Based on these expectations, "it's likely that the central bank will raise the benchmark rate to 4.00 percent by the year's end to curb inflation," analyst Pornthep Jubandhu at Siam Commercial Bank told Dow Jones Newswires.

Yanyong Phuangrach, the commerce ministry's permanent secretary, warned against panic-buying out of concern that new political policies could stoke inflation, as "that will cause a surge in prices".

The ministry predicted inflation would remain under 3.7 percent this year but expressed concerned over surging oil costs, which could cause a rise in the third quarter.

Thailand's new parliament is due to open on Monday, ushering in a Puea Thai-led coalition fronted by premier-in-waiting Yingluck Shinawatra, sister of the former populist premier Thaksin Shinawatra, who was ousted in 2006.

The economy has rebounded strongly from political violence during rallies by Thaksin's "Red Shirt" supporters last year -- which caused investor uncertainty and hit the key tourism sector -- posting strong growth of 7.8 percent in 2010.

Thailand, which has more subdued inflation than many regional neighbours, raised its key interest rate in July 2010 for the first time in almost two years and has hiked it by a total of 200 basis points since then.

-- (c) Copyright AFP 2011-08-01

[Pib]

It's up every bit of 4.08%! And headline inflation has gotta be in the 5 to 10% range based on the stuff I buy, especially food. Over the last year the in-laws and neighbor's have talked about so many things being significantly higher in cost...in previous years I didn't hear them complain as much about rising prices.

[ozzieman05]

The red shirts convinced every one in the wifes village it was the Democrat Government that caused the raise in Prices

Now they are hoping prices will drop and things will become cheaper

And with the extra money they will get (from the Government Money trees that must grow in Bkk) they will all be better off

Not a rosy future

Dream Bubble will soon burst like the bubbles that made them

[jamora]

It's up every bit of 4.08%! And headline inflation has gotta be in the 5 to 10% range based on the stuff I buy, especially food. Over the last year the in-laws and neighbor's have talked about so many things being significantly higher in cost...in previous years I didn't hear them complain as much about rising prices.

4.08% is headline inflation. At present, core inflation is at 2.59%.

[Pib]

It's up every bit of 4.08%! And headline inflation has gotta be in the 5 to 10% range based on the stuff I buy, especially food. Over the last year the in-laws and neighbor's have talked about so many things being significantly higher in cost...in previous years I didn't hear them complain as much about rising prices.

4.08% is headline inflation. At present, core inflation is at 2.59%.

I know that the Bank of Thailand refers to CPI as Headline Inflation and it's suppose to reflect the cost change in a basket of goods..and basket of goods as determined by the govt. And core inflation excludes food and energy. But I think the common man sees Headline Inflation as real world price changes he/she sees everyday like why does my bowl of noodles now cost 35 baht now compared to 30 baht (a 17% increase) a year ago, why have so many things in the market increased by a least 5-10% (or more), etc.

In order to save money and minimize the yearly real world inflation rise, I guess the common Thai better start just buying only the govt's basket of goods.

[kalbo123]

Latest news on Bloomberg...."Thailand inflation accelerates"

What do we believe...?

[Pib]

Believe the spending increase from your own pocket, the price tags you see, etc., as to if the cost of the wide variety of products/services only increased 4.08% over the last year. But each person's buying habits/needs will determine what true price percentage increase they have experienced.

Food sure has exceeded the CPI/headline rate based on my out-of-pocket spending at markets, noodle shops, restaurants, etc. At some many of these places, especially the restaurants, it usually easy to see where the price of many item on the wall or handheld menu has been adjusted upwards...the correction tape, white-out, paint, etc., with the new & improved price stands out pretty easily. That is, that 30 baht item is now 35 baht, that 60 baht item is now 70 baht, both of which examples is definitely significantly more than 4%. And we sure know that Thai's like to eat a lot/all the time...but most still stay skinny...I'm jealous. And those rising petrol prices, although diesel is getting a subsidy to cap its price....but the other petrol products have risen significantly. And those other commodity prices like metal products...Ouch on that price rise.

The price controls and subsidies that the Thai govt provides on many things, many of which probably fall in the basket of goods used to determine inflation rates, sure helps to suppress the official figures....but these price controls/subsidies don't cover all of the wide variety of products/services people buy. Some long stay farangs may not really notice how fast the prices of many things are rising because they are more concerned about the fewer number of baht they now get for their home country currency which is like a double whammy (i.e., higher prices, fewer baht). But the typical Thai, say making around 10K-30K baht/month, sure are feeling/noticing all the price increases. As mentioned, my in-laws and neighbors sure complaining much more about the price increases over the last year or so...most of the time I have no reason to dispute what they are saying because I'm seeing those new-and-improved (higher) prices also.