Thai inflation hits
14-month high in fresh headache for policymakers
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[June 02, 2014] By
Orathai Sriring and Kitiphong Thaichareon
BANGKOK (Reuters) -
Thailand's headline inflation rate accelerated to a
14-month high in May on higher food and energy prices,
government data showed on Monday, posing an additional
headache for policymakers facing a cooling economy and
fears of growing public unrest.
The headline consumer price index rose 2.62 percent in May from a
year earlier, the Commerce Ministry said. That compared with the
median forecast in a Reuters poll for a 2.59 percent rise and
followed a 2.45 percent increase in April.
Analysts said the central bank was likely to stand pat at its next
policy review on June 18 as it weighs the dilemma of rising
inflation and a slowing economy. The new military government faces
the task of reviving an economy that shrank in the first quarter
after months of political unrest.
"As inflation is going higher and the new government is able to push
ahead economic measures, there is no need for the central bank to
cut rates further, maybe all year," said Sarun Sunansathaporn,
economist at Tisco Securities in Bangkok.
"But uncertainty remains high, so it is unlikely to rush to raise
interest rates as well," he added.
The core inflation rate, which strips out fresh food and energy
prices, quickened to 1.75 percent year-on-year in May, from 1.66
percent in April and against 1.70 percent in the poll. That was
still well within the Bank of Thailand's target range of 0.5-3.0
percent, which guides monetary policy.
At its last meeting in April, the central bank held the one-day
repurchase rate, its key policy rate, steady at 2.0 percent - a
level last seen in December 2010 - after two cuts since November to
shore up the economy.
The central bank has forecast headline inflation of 2.5 percent for
this year and core inflation of 1.5 percent. It is scheduled to
release its new economic forecasts on June 27.
Food and beverage prices rose 4.39 percent in May from a year
earlier after rising 4.61 percent in April, Monday's data showed,
pushed up by drought in parts of the country. Energy and utility
prices were also higher.
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Commerce Ministry adviser Ampawan Pichalai told a briefing that "the
new government's policies to maintain the price of diesel and
cooking gas will help bring down living costs and ease inflationary
Prices in Thailand have been contained by government controls and
subsidies as well as weaker domestic demand, which has been hurt by
the months of unrest in Bangkok before the army seized power on May
22 in an effort to restore order.
Air Chief Marshal Prajin Juntong, who is overseeing economic matters
for the junta, on Sunday outlined a list of emergency measures to
help the economy, including price caps on fuel.
(Additional reporting by Satawasin Staporncharnchai; Editing by
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