Inflation rose by 0.35% in August, largely driven by an increase in prices for fresh vegetables and fruits due to flood damage in key production areas.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office (TPSO), reported that the headline inflation rate for August increased 0.35% year-on-year, primarily because of higher food costs, particularly for fresh produce affected by flooding, which has diminished crop yields.
Additionally, prices for rice, glutinous rice, and ready-to-eat meals also saw an uptick. Meanwhile, the prices of other goods and services remained stable, he noted.
The consumer price index (CPI) in August saw a 0.07% month-on-month increase compared to July, mainly due to a 0.79% rise in the food and non-alcoholic beverages category.
Over the past eight months, the average CPI has increased by 0.15% year-on-year. Core inflation, which excludes fresh food and energy, rose by 0.62% year-on-year, with the first eight months of the year averaging 0.44%.
Looking ahead to September, the TPSO anticipates an increase in headline inflation due to three main factors. First, the diesel price ceiling of 33.00 baht per litre is higher than during the same time last year, following the government’s termination of support measures. Second, flooding has driven up prices for fresh vegetables and fruits in affected agricultural regions, although this is expected to be a temporary effect. Third, geopolitical tensions may lead to uncertainties in key commodity prices, including increases in freight and shipping costs, according to the TPSO.
Despite these inflationary pressures, Mr. Poonpong indicated that certain factors could help mitigate inflation, such as a year-on-year decline in electricity prices due to government measures and strong competition among large wholesale and retail traders. He also mentioned that the growth of e-commerce has prompted the adoption of trade promotion strategies, particularly ongoing price reductions.
Furthermore, while the base price for Dubai crude oil in 2023 is higher than the current price, oil prices are gradually recovering amid sluggish global economic growth, noted Mr. Poonpong.
He stated, “The digital wallet scheme will not contribute to inflation but is expected to enhance household purchasing power.”
For the fourth quarter, the TPSO predicts an average headline inflation rate of 1.5%, influenced by rising global crude oil prices and the discontinuation of government support measures for fuel and electricity.
The Commerce Ministry forecasts that this year, headline inflation will fall between 0.0% and 1.0%, with an average of 0.5%, in line with the current economic landscape.
As of July 2024, Thailand’s inflation rate, which increased by 0.83% year-on-year, positions the country within the low-inflation group, ranking 10th out of 128 economies that reported their figures. Among ASEAN countries, Thailand held the second-lowest inflation rate.
