Inflation eases in March

[Lite Beer]

Inflation eases in March

BANGKOK: -- The Ministry of Commerce announced today that inflation figure for the month of April fell by 1.04% for the four consecutive months mainly due to lower fuel prices.

The Consumer Price Index (CPI) or inflation for April 2015 stood at 106.35, an increase of 0.02%.

This is however offset by the fact that when compared to the same period in 2014, represents a drop of 1.04%.

Falling oil and fresh food prices are the main contributors to the drop in inflation for the first four months of the year, representing a deficit of 0.65%.

In any event, the rate of inflation for 2015 is still within projected levels of between 0.6 – 1.3% which were made under the assumption that the country’s economy would grow by 3 – 4%, global oil prices standing at US$ 50 – 60 per barrel and exchange rates fluctuating around the 32 – 34 baht to the dollar.

Oil prices, however, are expected to gradually rise during the fourth quarter of this year.

Bank of Thailand spokesman Jirathep Seniwong, meanwhile, stated that rising inflation figure is a clear indicator that the country’s economy is still weak and will take time to recover.

He warns that the Monetary Policy Committee’s move to reduce policy rates by 0.25% in order to reduce risk might instead result in deflation.

Meanwhile, The NNT reported that the Office of Industrial Economics (OIE) said the manufacturing product index (MPI) of March 2015 was down by 1.8% mainly in the export industry, while industry manufacturing during the first quarter of 2015 expanded 0.1%.

OIE deputy director Somsak Jantararoungtong stated that the MPI for March contracted by 1.8%, mainly in the export industry such as the manufacturing of hard disk drive (HDD), television, and electronic appliances, due to the sluggish recovery of the global economy, and the suspended production of HDD manufacturers due to machinery maintenance.

The export volume of industrial goods in March, excluding gold, also shrank by 2.5% in line with the lower fuel prices.

Decline in exports of garments, computers, instruments and related parts, electricity circuits, and air conditioners and related parts during the first quarter of 2015 also resulted in a 1.4% contraction of industrial goods.

At the same time, import of capital goods also experienced a 9.1% contraction, while import of raw materials also fell 1%.

The auto industry also saw a drop in car production in March with production fell 1.72% while domestic car sales plunging by 11.75%.

However car export has increased by 12.63% when compared to the same period of last year.

For the food industry, production has increased by 3.5%, and food exports increased by 0.5% due to the recovery of countries such as the United States and the lower few prices.

Source: http://englishnews.thaipbs.or.th/inflation-eases-in-march

-- Thai PBS 2015-05-02

[elgordo38]

Ye gads they have found the same inflation measurement stick that the rest of the world uses.

[Srikcir]

"the rate of inflation for 2015 is still within projected levels of between 0.6 – 1.3% which were made under the assumption that the country’s economy would grow by 3 – 4%,"

Inflation coupled with adequate GDP growth reflects a healthy economy. Generally, inflation below 2.5% reflects "deflation" as GDP growth is not sustainable.

BUT

Thailand's projected rate of inflation of 0.6-1.3% in combination with the various negative economic indicators and a collapsing GDP reflects full-fledge deflation. The primary effects of deflation are a lack of available capital for business recovery/growth and downturn in rate of domestic consumption. With export growth almost flat and the government stalling any significant economic stimulus, Thailand's economy will essentially slide back to the 1970's as the rest of the ASEAN countries advance economically.