BoT: Energy prices won't impede economic recovery

[webfact]

BoT: Energy prices won't impede economic recovery
By Digital Content



BANGKOK, Dec 3 - The Bank of Thailand (BoT) said Wednesday that inflation would be down for 1-2 years, that low oil prices would not obstruct Thai economic recovery next year and that low inflation would not lead to deflation.

BoT spokesman Chirathep Senivongs Na Ayudhya said inflation would slow in the next 1-2 years and oil prices would remain low until the first quarter of next year.

He said the Organization of Petroleum Exporting Countries (OPEC) will not cut their oil production to keep prices low to stop the United States from producing oil with a new and more expensive technology. Besides, the Thai government is restructuring energy prices.

Therefore, the Thai economy should grow better than it is this year, Mr Chirathep said.

He said that energy prices would neither block economic recovery nor cause deflation because although prices fell, consumption did not.

Lower energy prices would improve the balance of trade and cut business costs and the cost of living, he said. Thailand's oil consumption will account for 12 per cent of its gross domestic product, Mr Chirathep said.

The central bank wants to base its monetary policies on headline inflation instead of core inflation which was attached to the prices of oil and fresh foods and did not include other factors.

With headline inflation, monetary policies would better reflect the public’s cost of living and the BoT could better communicate with people, Mr Jirathep said.

The BoT is waiting for approval from the government for the change. (MCOT online news)


-- TNA 2014-12-04

[Pib]

Sure lower energy prices hold down inflation...and maybe some who have investments in energy companies try to spin the story that lower energy prices can cause deflation. But if lower energy prices cause a little bit of deflation then I personally consider that good deflation. Doesn't bother me at all that my energy costs are going lower, and hopefully in turn, causing other costs to go lower or at least rise slower.

Edited December 4, 2014 by Pib

[Always18]

Sorry, but that photo is pure "Quid me vexari?"!

[worgeordie]

Bought a bottle of cooking gas yesterday up by 30 bht

from last month,is that not inflation,Govt inflation and

real life inflation are never the same.

regards Worgeordie

[selftaopath]

If oil prices are down, why has it not impacted gasoline prices in Thailand?

[FangFerang]

When oil prices go down, the cost of fuel stabilizes (doesn't change). When the cost of oil goes up, it ripples all the way to the pump and raises profits nicely (since the fuel in the pump was bought at a lower price). Simple.

By the way -- that picture is hilarious. It says two things to me -- 1) "I have no real power, but I have a great job with no responsibility. Thanks, Dad!!" and 2)

"What me worry?"

[Langsuan Man]

This is what happens when you have government price controls, the prices of crude goes down but the bureaucracy that manages it can't react quick enough, by the time they get off their ass, the price of crude will be back up

[Ozziepat]

Stand by for distorted inflation figures. The article did not mention that fuel and food costs, which are major contributing factors to cost of living for most folks, might be removed from inflation computations. It happened in the US, it can happen in Thailand. The excuse was "too volatile," ignoring the fact that such things as moving averages exist. If the government considers low inflation a good thing, it will have low inflation - one way or another. And oh by the way, who declared deflation a bad thing? Answer: It's only bad for governments and banks. It's a good thing for consumers, something government and banks won't ever admit.

[elgordo38]

Stand by for distorted inflation figures. The article did not mention that fuel and food costs, which are major contributing factors to cost of living for most folks, might be removed from inflation computations. It happened in the US, it can happen in Thailand. The excuse was "too volatile," ignoring the fact that such things as moving averages exist. If the government considers low inflation a good thing, it will have low inflation - one way or another. And oh by the way, who declared deflation a bad thing? Answer: It's only bad for governments and banks. It's a good thing for consumers, something government and banks won't ever admit.

North American countries have been using this "too volatile" gag for years maybe decades. Inflation is much higher than the 1 or 2% being touted in the west. Low inflation figures puts a lid on our pension increases. Our Golden Years are turning to lead.