Thailand July inflation picks up but remains below target

03, Aug. 2019

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BANGKOK, NNA – Inflation in Thailand accelerated in July as hot and dry weather kept food prices high, consumer price index data released Thursday by the Commerce Ministry showed.

July’s headline inflation was below the central bank target range of 1 to 4 percent for a second straight month.

Key points:

―― The July CPI rose 0.98 percent from a year earlier, after a 0.87 percent gain in June, which had been the slowest increase in four months. The July figure was in line with the median economist forecast of 1 percent.

―― Core inflation, excluding food and energy items, edged up 0.41 percent in July, after posting a 0.48 increase. The 0.41 percent gain was weaker than economist forecast of 0.5 percent.

―― The prices for food and non-alcoholic beverages jumped 3.47 percent compared with 3.12 percent in June due to prolonged hot weather and the base year effect of lower food prices in the second half of 2018, the director-general of the Commerce Ministry’s Trade Policy and Strategy Office, Pimchanok Vonkorpon, told reporters. The 3.47 percent increase was the fastest pace since a 3.85 percent gain in September 2014.

―― Vegetable and fruit prices surged 13.18 percent after rising 12.7 percent the previous month.

―― Higher food prices were partly offset by continued drops in energy costs. Energy prices slid 3.31 percent in July after dropping 3.86 percent in June. Fuel prices fell 5.44 percent after declining 6.26 percent in the previous month.

―― On a month-on-month basis, inflation inched up 0.06 percent, after a 0.36 percent decline in June.

Takeaway:

―― The government is considering measures to support slowing economic growth, including hiking minimum wages and providing agricultural price insurance. New policies may affect prices in the future, said Pimchanok.

―― Thailand’s Meteorological Department forecast last month that high temperatures will be alleviated in August, citing heavy rains brought by tropical storms in many areas.

―― The central bank has left its policy interest rate unchanged at 1.75 percent since hiking it in December for the first time since 2011. The cost of easing appears to outweigh the benefit amid rising household debt and slowing growth, economists said.