Inflation in Thailand Rises by 0.88% in August 2023, Driven by Higher Energy Prices

August 2023 Consumer Price Index Reveals Increase in Inflation Rates

The Trade Policy and Strategy Office (TPP) announced that the consumer price index (CPI) for August 2023 stood at 108.41, representing a 0.88% increase in headline inflation. This uptick can be attributed to the surging energy prices in the global market, leading to a rise in gas, gasohol, and cooking gas prices within the country. Consequently, headline inflation maintained an average growth rate of 2.01% for the first eight months of this year.

Additionally, the core inflation, measured by the Core Consumer Price Index (Core CPI), rose by 0.79% in July 2023, resulting in an overall increase of 1.61% in the average core inflation rate during the initial eight months of the year. The Ministry of Commerce is presently revisiting the inflation expectations for 2023 due to three factors—economic growth rate, exchange rate fluctuations, and crude oil prices—experiencing significant changes in recent times.

In August, the consumer price index for categories excluding food and drink witnessed a YoY increase of 0.98%, propelled by the rising prices of vehicles, transportation, and communication. Particularly noteworthy were the heightened fuel prices, which corresponded to the global market’s trend. The cost of airfares, motorcycle taxis, and minibuses/songthaews also escalated due to increased expenses. Moreover, the price of cooking gas remained at a higher level than the previous year.

A comparative analysis reveals that Thailand’s inflation rate remains relatively low when compared to foreign countries. In July 2023, Thailand’s inflation rate was the lowest among ASEAN countries, including Laos, Philippines, Singapore, Indonesia, Malaysia, and Vietnam. However, certain countries encountering adverse weather conditions such as drought experienced accelerated inflation rates, as seen in India where agricultural product prices soared.

Predictions for September 2023 Inflation Rates

According to the FAO director, the inflation trend in September 2023 is expected to remain stable or experience a slight increase. Contributing factors to this projection include the sustained high energy prices of fuel, electricity, and cooking gas and a potential rise in domestic demand from the government’s economic stimulus measures. Furthermore, severe drought conditions in numerous countries worldwide have caused a decline in agricultural crop and livestock production, leading to higher prices in the food and related product groups.

Nevertheless, Thailand’s key trading partners have experienced economic slowdowns, and the Bank of Thailand (BOT) has implemented tighter monetary measures, thus impacting both demand and domestic investment. Inflationary pressures are expected to stabilize without significant increases due to a high base calculation of 65 for September.

The Director of the Trade Policy and Strategy Office, Mr. Poonpong Naiyanapakorn, emphasized that forthcoming government measures will likely play a significant role in influencing inflation rates. These measures aim to reduce the cost of living and expenses in the manufacturing and service sectors through reductions in electric train ticket prices, oil prices, electricity prices, and cooking gas prices. Additionally, geopolitical conflicts remain a point of concern that necessitates close monitoring.

“We eagerly await the government’s upcoming cost of living support measures, including reductions in fuel, electricity, and electric train prices. While the extent of these reductions remains unclear, we firmly believe they will have a definitive impact on inflation. The Sor.Nor has developed contingency plans to address potential inflationary effects resulting from these reductions. However, for now, let us patiently await the clear details of these measures, their timeline, and the extent of their reductions,” stated Mr. Poonpong.

Mr. Poonpong Naiyanapakorn The Director of the Trade Policy and Strategy Office (TPP), Ministry of Commerce announced the main consumer price index (CPI) in August 2023 at 108.41, resulting in a 0.88% increase in headline inflation as a result of rising energy prices in the market world As a result, the price of gasoline, gasohol and cooking gas increased in the country. As a result, headline inflation was average for the first 8 months of this year. (Jan-Aug. 23), up 2.01%

Core Consumer Price Index (Core CPI) or Core Inflation In July 2023, it was 104.41, resulting in an increase in core inflation of 0.79%, giving an increase of 1.61% to the average core inflation rate for the first 8 months of this year .

The Ministry of Commerce is preparing to revisit inflation expectations for 2023 in its next statement. From the current 1-2% expected because the 3 factors used to calculate inflation have changed. the economic growth rate, the exchange rate and crude oil prices in the world market

Mr Poonpong said that the consumer price index in August prices for categories other than food and drink rose by 0.98% (YoY) in line with an increase in the prices of vehicles, transport and communication. In particular, the price of fuel has increased in line with almost all types of world market prices. Including prices that increase according to costs, such as airfares. Motorbike taxi and minibuses/songs ticket. the price of cooking gas is still at a higher level than last year

However, considering the inflation rate of Thailand compared to foreign countries (The latest data will be in July 2023) we find that the main inflation rate of Thailand is in the group of countries with low inflation rates. and the lowest in ASEAN for the fifth consecutive month out of seven countries that have published figures (Laos, Philippines, Singapore, Indonesia, Malaysia, Vietnam). Except for some countries that are experiencing drought. and bad weather, like India, which causes the price of agricultural products to rise and inflation accelerated considerably

The FAO director also mentioned that the inflation trend in September 2023 is likely to remain stable or may increase slightly. The factors that positively affect inflation are energy prices, including fuel, electricity and cooking gas, which remain at a high level. Including domestic demand that could increase from the new government’s economic stimulus measures. Severe drought situation than last year in many countries around the world. causing the amount of agricultural crops and livestock to decrease resulting in food group products and related products having higher prices

However, the economic situation of Thailand’s key trading partners slowed. and the use of tighter monetary measures by the Bank of Thailand (BOT), which affected demand. and domestic investment Including the basis for calculating inflation in September. 65 which is high is a factor for inflationary pressure to stabilize and not increase much

Mr Poonpong said there are still factors caused by government measures. that is expected to come out in the near future which will significantly affect inflation, such as measures to reduce the cost of living and reduce costs in the manufacturing and service sectors (reducing electric train ticket prices, oil prices, electricity prices, cooking gas prices ) and geopolitical conflicts that still need to be closely monitored

“We are waiting to see the new government’s cost of living support measures. including reductions in fuel, electricity and electric train prices that the reduction will be in size but believe that it will definitely affect inflation The Sor.Nor has already made a prepared doll that if this reduction affects inflation at this rate But for now, let’s wait to see the measures that will come out clearly. when will it come out and how much can it be reduced?” Mr. Poonpong say

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