Floods Continue To Push Up Thai Inflation

[webfact]

Floods continue to push up Thai inflation

BANGKOK, December 1, 2011 (AFP) - Thai inflation held steady in November, government data showed Thursday, as the country's worst flooding in decades caused widespread damage to farmland and forced food prices higher.

The consumer price index rose 4.19 percent in the month from a year earlier, against a similar 4.19 percent rise in October, the commerce ministry reported.

"Prolonged flooding has accelerated inflation, especially ongoing flooding in Bangkok and the suburbs, which have affected industrial output and agricultural production," the ministry said in a monthly report.

"The floods have curtailed production and hindered transportation, which has resulted in higher prices for certain commodities," it added.

Three months of unusually heavy monsoon rains have inundated large swathes of the country, killing more than 666 people and affecting the homes and livelihoods of millions.

Core inflation in November, which excludes volatile energy and food prices, rose 2.9 percent compared with last year.

The increase in core CPI was within the central bank's 0.5% to 3.0% target range.

Food inflation in November soared 10.21 percent year-on-year.

The ministry said it expected the floods would push overall inflation for 2011 up 0.1 point to 3.8 percent, which is still within the range of the ministry's 2011 projection of 3.2 to 3.8 percent.

Floods have hit domestic consumption hard, the ministry said, as many people have lost jobs and income.

The central bank on Wednesday reduced the official cost of borrowing by 0.25 percentage points to 3.25 percent -- the first cut in two years as it slashed its growth forecasts citing the devastating floods and the global slowdown.

The global economic slowdown coupled with weak business confidence pose a greater risk to the Thai economy than rising inflation, assistant governor Paiboon Kittisrikangwan said.

-- Dow Jones Newswires contributed to this report

-- (c) Copyright AFP 2011-12-01

[Oberkommando]

Food inflation in November soared 10.21 percent year-on-year.

10%+ is an incredible year on year increase, and proves that Thailand is getting more and more expensive, not only for visitors but more importantly for those locals at the poorer end of the spectrum.

Real trouble ahead I fear as the full extent of the flooding hasn't yet been realised.

[KKvampire]

vegetables are up 50 -100% in the supermarkets

[Jingthing]

vegetables are up 50 -100% in the supermarkets

I haven't found the increases to be nearly that high.

[ratcatcher]

Food inflation in November soared 10.21 percent year-on-year.

10%+ is an incredible year on year increase, and proves that Thailand is getting more and more expensive, not only for visitors but more importantly for those locals at the poorer end of the spectrum.

Real trouble ahead I fear as the full extent of the flooding hasn't yet been realised.

Never mind OK, P.M. Yingluck and her band of Merry Men will take care of all the problems as promised. Have faith.

[KKvampire]

vegetables are up 50 -100% in the supermarkets

I haven't found the increases to be nearly that high.

You go Lotus, Green beans, and other greens are

[gregb]

1800g S26 Gold infant formula #3 up from 750 baht to 812 baht in the last 30 days. Eggs are consistently over 140 baht for a 30 pack, where they were 105 before the floods. Just paid 159/kg for ground pork. Was only 119 before the disaster.

Food inflation is crippling everyone. But the BOT needs to ignore inflation numbers for now and reduce the prime lending rate further to help residents rebuild. Sure you can help lower inflation by killing the impoverished flood victims and therefore reducing demand, but that isn't a very moral approach to this problem. You need to increase lending to re establish supply. The prices will increase in the short term, but they should come back down in time.

But I don't suspect any of the financial experts out there really differentiate between those two scenarios. Bankers rarely care about the people their immoral policies kill. They'll quite happily contribute to genocide if they can profit by it.

[mijan24]

vegetables are up 50 -100% in the supermarkets

vegetables are up 50 -100% in the supermarkets

I haven't found the increases to be nearly that high.

• May well be the time for the lady of the house to start rising earlier and pop off to the local market for the days vitals.
  
• This would achieve several things, early morning exercise, fresh vegetables, put money direct into the Thai pocket (economy) instead of the multi nationals.
  
• The shock (early rising) along with shopping with no trolley may be too much for some.
  

It will be interesting if you could post your wifes reaction to this I am sure it will range from "Great Idea will take the children so they can learn the value of money" To Agast-Shock Horror we have the ATM Card for such things they don't take them at the local market!!

[haveaniceday]

"You go Lotus, Green beans, and other greens are "

Even before the floods, those foot long green beans at Tesco were imported, go figure !!!!

[janverbeem]

vegetables are up 50 -100% in the supermarkets

vegetables are up 50 -100% in the supermarkets

I haven't found the increases to be nearly that high.

• May well be the time for the lady of the house to start rising earlier and pop off to the local market for the days vitals.
• This would achieve several things, early morning exercise, fresh vegetables, put money direct into the Thai pocket (economy) instead of the multi nationals.
• The shock (early rising) along with shopping with no trolley may be too much for some.

It will be interesting if you could post your wifes reaction to this I am sure it will range from "Great Idea will take the children so they can learn the value of money" To Agast-Shock Horror we have the ATM Card for such things they don't take them at the local market!!

At the markets the prices for vegetables have risen similar.

[jucel]

I must be fairly lucky. Where i live eggs (small) are down to 30b for 10, fruit/veg pretty much the same. Bought 800g (2 x 400) of mince pork from tesco for 66b (half price but need to be thrifty sometimes! & had not discoloured). 2kg of french fries in tesco in 99b, which compared to the caviar prices in restaurants is a real bargain. Chips/french fries seem to have a 'farang will pay anything for them' price. The only thing that has gone up is beer in the beach hotels/bars, although Tesco is now selling 12 large chang for 457 ( as they are pushing the export). I find it simple, if the price of an item goes up beyond the price I am willing to pay, i find a substitute i.e i didn't eat eggs on principle when they doubled in price recently as I knew they was not a shortage of supply, just profiteering.

[janverbeem]

I must be fairly lucky. Where i live eggs (small) are down to 30b for 10, fruit/veg pretty much the same. Bought 800g (2 x 400) of mince pork from tesco for 66b (half price but need to be thrifty sometimes! & had not discoloured). 2kg of french fries in tesco in 99b, which compared to the caviar prices in restaurants is a real bargain. Chips/french fries seem to have a 'farang will pay anything for them' price. The only thing that has gone up is beer in the beach hotels/bars, although Tesco is now selling 12 large chang for 457 ( as they are pushing the export). I find it simple, if the price of an item goes up beyond the price I am willing to pay, i find a substitute i.e i didn't eat eggs on principle when they doubled in price recently as I knew they was not a shortage of supply, just profiteering.

As you say,profiteering is the game.For example,the other day I was at Makro and the freezers were filled up with french fries,at a higher than usual price,but none of the brands,at least 4 different brands sold, had straight cut available.Shoestring in ample amounts available.

So what they gonna say,the straight cut factory was flooded?

Currently no coke/pepsi or related softdrinks available anywhere.They dropped of two pallets of regular coke when I was at Makro and it vanished within minutes,with Thais loading their trolleys with 6 to 8 dozens at the time.Didn't know that coca cola had only one factory at the moment?

Now they have " big cola" available although not the regular sizes.It are or the very small bottles at inflated prices or bottles of 3,5 liters that are sold. Never seen these sizes available previously.Must be that the regular size factory is flooded then.

What I see behind these phenomens is that shortages are created only to justify inflated prices and/or sell products that always have been in less demand.

[IsaanUSA]

Devil's advocate....I would assume they are still having some delivery (logistics) problems. I don't think the big supermarkets would be intentionally ripping off people. They would prefer their shelves to be full so you could buy your normal things.

[letitbe]

I feel really sorry for those on lower end of scale like our maid Her family struggle to cope with huge increases in basics like sticky rice and her sons transport to school and his dinner money etc. Its not just recently. We feel a bit guilty about being so well off compared with her family but we are also suffering with collapse of us$ and GBP and big losses in investments due to 2008/09 crash. She always says she does not know how she and her family could survive without her job with us and all perks we give her but I keep telling her shes worth every baht and more. Given she gets around 9,000 baht a month salary from us plus many many perks and both her husband and elder son work but earn lots less than her I simply do not know how others survive. She is after many years one of nicest most honest people ive ever known. We would never if we can let her or her family go hungry and in all honesty shes probably worth double what we pay. I totally despise those Forang and rich Thais who boast they pay their maids 4,000 or less totally disgusting when they will spend tens of thousands on shopping or toys. Of course if you have a maid and shes a lazy cow she gets what she deserves and sadly to many Thais think farang are stupid if we pay a reasonable or decent amount. Many years ago we had a maid like that who did as little as she could get away with and is a neighbour of our current maid and one of her family and she now hates us but then as well as being totally useless lazy she also stole but will never understand shes made her own bed and is now totally destitute but still seeks money from our maid as if its her right. And I'm a total capitalist and for some right winger. For those who have honest good staff I urge you to pay them more if you can and then maybe one day those who lie cheat and think its clever to do so will learn but I doubt it. i fear for poor not only here but everywhere in current financial situation but all you can do really is do your best to protect you family and those around you. And those who say nonsense you can live on 10,000 a month try it with kids at school medical and all rest even living Thai style. Most Thais on that sort of money eat crap live in awful conditions and if ill just cant pay for medical care whatever any poster will say about so called great 30 baht health scheme that just gives us aspirin in most cases.

Edited December 4, 2011 by Scott
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[IsaanUSA]

Since you pay her less than 10,000 baht, then why don't you fill us in on the perks that you provide for her?

[Ricardo]

Never mind OK, P.M. Yingluck and her band of Merry Men will take care of all the problems as promised. Have faith.

As evidenced by this determined no-nonsense cut in interest-rates ... of 0.25% ... showing how seriously they take the situation.

Meanwhile the cost of a 5-kg bag of rice, formerly 110B-125B, is now costing me 199B 'on special' at Tesco-Lotus. How are the poor expected to be able to feed themselves at these prices ?

[backsoon]

Never mind OK, P.M. Yingluck and her band of Merry Men will take care of all the problems as promised. Have faith.

As evidenced by this determined no-nonsense cut in interest-rates ... of 0.25% ... showing how seriously they take the situation.

Meanwhile the cost of a 5-kg bag of rice, formerly 110B-125B, is now costing me 199B 'on special' at Tesco-Lotus. How are the poor expected to be able to feed themselves at these prices ?

Agreeing with almost everything said here, I must say that:

a)profiteering from natural national disaster comes not only in form of theft, burglary, but in bumping up prices due to shortages;

b)my main concern is with the tendency of higher prices to stay, even after the reasons for their increase are no more.

[osiboy]

As posted on the "global drive to help tourist industry" , thailand is more expensive than many europen countries especially as far as food is concerned, and i just cant understand why local fruit is so expensive, bananas and melons are cheaper in the uk,as are many other fruits , when taking into account the wage differences , thai fruit is about 400% more expensive, if it was'nt a hot country and had heating bills to contend with it would be impossible for most thais to exist, even if it was only cool in the evenings as with many other hot countries.......... chicken, eggs, pork ,are about the same,... so is beef of poor quality , biscuits, cake , spagetti ,quality lettuce, potatoes,coffee ,milk ,all more expensive here, and so are clothes, its a myth that they are cheaper here, they maybe about the same but usually of poorer quality , try buying branded trainers here, or sandals , they are double the price, i bought reebok classics, and slazenger sandals before my return this time at 1,200B, and 250B ,...... try getting them here for anywhere near that price, another poster says cans of beer @ tesco for 459B ? ........so are 15 cans of stella or carlsberge export in the UK...................... ..THAILAND IS EXPENSIVE !

[h90]

Some of my male staff earning 7-8.000, married, 1-2 children. So it seems it is possible.

Edited December 4, 2011 by Scott
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[puntmeister]

As posted on the "global drive to help tourist industry" , thailand is more expensive than many europen countries especially as far as food is concerned, and i just cant understand why local fruit is so expensive, bananas and melons are cheaper in the uk,as are many other fruits , when taking into account the wage differences , thai fruit is about 400% more expensive, if it was'nt a hot country and had heating bills to contend with it would be impossible for most thais to exist, even if it was only cool in the evenings as with many other hot countries.......... chicken, eggs, pork ,are about the same,... so is beef of poor quality , biscuits, cake , spagetti ,quality lettuce, potatoes,coffee ,milk ,all more expensive here, and so are clothes, its a myth that they are cheaper here, they maybe about the same but usually of poorer quality , try buying branded trainers here, or sandals , they are double the price, i bought reebok classics, and slazenger sandals before my return this time at 1,200B, and 250B ,...... try getting them here for anywhere near that price, another poster says cans of beer @ tesco for 459B ? ........so are 15 cans of stella or carlsberge export in the UK...................... ..THAILAND IS EXPENSIVE !

In many ways, I would agree with you. It is a bit of an illusion that Thailand is cheap. The illusion mainly stems from the cost of street food: For 30 baht, you can eat a decent stir-fried lunch. Not really possible to eat lunch for under a Euro anywhere in Europe, or for $1 in the US.

Rent is generally cheap as well - but, then again, secondary cities in the US tend to be about as cheap. No, you can't find an apartment for $100/month - but none of them are 150 square feet either...On a PSF basis, cost is equal, or cheaper, in the US. Perhaps not so for Europe.

Beyond that, most everything else is more expensive in Thailand. And if you want your kids to have decent education and healthcare - well, you had better be filthy rich.

[xthAi76s]

I think it's more telling to reflect on value in addition to prices.

I think value is understood differently in Thailand than it is in many Western countries. Prices on items or services above item pre-sale cost (aka profits) are some arbitrary anyway and have much to do with how people perceive the value of the items/services to be. I can certainly eat street food very cheaply here in Bangkok, food that I would not find easily in NYC. This, for me, is a good value. However, on the other end of the spectrum, if I want a truly nice beef steak meal in a nice, clean, quiet atmosphere (something many people in NYC value), I absolutely cannot find that here at a reasonable cost. What Bangkok offers at my level of preference is abhorrent and so it is not a good value to me. You can say higher standards are at play, or you can be more polite by saying that there are differences in perceived value, but it's the same thing, imo. Same is true for real estate here. What passes for luxury here in Bangkok is simply trash to me much of the time and so not a good value, but it may certainly be a good value to Thais who can afford it.

The other condition is wealth distribution. With a country that has 1) no real, powerful middle class and 2) such a typically huge wealth gap between the rich (relatively ultra-rich) and poor (relatively very poor) -- this affects the value perceptions as well. You essentially have two 'values propositions' to choose from: poor value proposition and rich value proposition. To support these value propositions, you have in the rich corner a good percentage of the relatively rich foreigners (vacationers, expats, etc) and the very small percentage of Thais who are in the upper class, and in the poor corner you have almost everyone else. There is no real middle of the road value proposition to speak of here, and for this reason the perceived value of the high end stuff is hugely inflated in terms of price. Also, because there is no middle, the quality of the high end value prop is often suspect as there is no middle competition to compare it to for purposes of competition.

So, imo, the summary here is to live in Thailand like many of us normally would in our Western countries/cities, if we were more middle class and less ultra wealthy class, we need to spend more than we think we should to achieve similar relative value. And, with the rich having a complete intellectual and cultural stranglehold on Thailand, it may only continue to get worse. A strong, educated, open-minded, competitive middle class is what Thailand will need to really bring up standard of living for the masses and provide more cost controls, and that's not happening anytime soon, I fear.

As posted on the "global drive to help tourist industry" , thailand is more expensive than many europen countries especially as far as food is concerned, and i just cant understand why local fruit is so expensive, bananas and melons are cheaper in the uk,as are many other fruits , when taking into account the wage differences , thai fruit is about 400% more expensive, if it was'nt a hot country and had heating bills to contend with it would be impossible for most thais to exist, even if it was only cool in the evenings as with many other hot countries.......... chicken, eggs, pork ,are about the same,... so is beef of poor quality , biscuits, cake , spagetti ,quality lettuce, potatoes,coffee ,milk ,all more expensive here, and so are clothes, its a myth that they are cheaper here, they maybe about the same but usually of poorer quality , try buying branded trainers here, or sandals , they are double the price, i bought reebok classics, and slazenger sandals before my return this time at 1,200B, and 250B ,...... try getting them here for anywhere near that price, another poster says cans of beer @ tesco for 459B ? ........so are 15 cans of stella or carlsberge export in the UK...................... ..THAILAND IS EXPENSIVE !

In many ways, I would agree with you. It is a bit of an illusion that Thailand is cheap. The illusion mainly stems from the cost of street food: For 30 baht, you can eat a decent stir-fried lunch. Not really possible to eat lunch for under a Euro anywhere in Europe, or for $1 in the US.

Rent is generally cheap as well - but, then again, secondary cities in the US tend to be about as cheap. No, you can't find an apartment for $100/month - but none of them are 150 square feet either...On a PSF basis, cost is equal, or cheaper, in the US. Perhaps not so for Europe.

Beyond that, most everything else is more expensive in Thailand. And if you want your kids to have decent education and healthcare - well, you had better be filthy rich.

Edited December 4, 2011 by ThailandMan

[longtom]

As posted on the "global drive to help tourist industry" , thailand is more expensive than many europen countries especially as far as food is concerned, and i just cant understand why local fruit is so expensive, bananas and melons are cheaper in the uk,as are many other fruits , when taking into account the wage differences , thai fruit is about 400% more expensive, if it was'nt a hot country and had heating bills to contend with it would be impossible for most thais to exist, even if it was only cool in the evenings as with many other hot countries.......... chicken, eggs, pork ,are about the same,... so is beef of poor quality , biscuits, cake , spagetti ,quality lettuce, potatoes,coffee ,milk ,all more expensive here, and so are clothes, its a myth that they are cheaper here, they maybe about the same but usually of poorer quality , try buying branded trainers here, or sandals , they are double the price, i bought reebok classics, and slazenger sandals before my return this time at 1,200B, and 250B ,...... try getting them here for anywhere near that price, another poster says cans of beer @ tesco for 459B ? ........so are 15 cans of stella or carlsberge export in the UK...................... ..THAILAND IS EXPENSIVE !

Bananas and melons are cheaper in the UK? 10/20 baht per kilo is expensive? I wonder what would be an acceptable price for you.

[GOLDBUGGY]

True! But with all this inflation, economic crises and unemployment due to flooding, slow growth forecasts so bank rates dropping .25% points, with more expected, and huge drops in tourism, the Baht remains very strong. Go Figure??? For myself, a 10% or 20% drop in the Thai Baht would sure make my food bill seem smaller.