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Thai Inflation Jumps to Near 14-Year High on Costly Oil
Consumer prices rise 7.1% in May, more than double the target BOT governor had foreseen price uptick on energy, food costs
Suttinee Yuvejwattana
6 June 2022, 16:06 GMT+8
Thailand’s retail inflation quickened in May to its highest in nearly 14 years, a level that may test the central bank’s resolve to stand pat on borrowing costs.
Consumer prices rose 7.1% from a year earlier, accelerating from 4.7% a month ago, official data showed Monday. That’s faster than the median 5.9% gain predicted by economists in a Bloomberg survey and the highest since July 2008.
The uptick in the inflation rate was driven mostly by energy and food items, a development that was foreseen by Bank of Thailand Governor Sethaput Suthiwartnarueput. Policy makers may find it difficult to ignore the print that’s come in at more than double the central bank’s 1%-3% target days before the interest rate review, but some economists say they may still buck the trend of the global tightening.
Key numbers from Monday’s print:May 2022April 2022|
| CPI | 7.10% | 4.65% | | Core CPI | 2.28% | 2.00% | | Food | 6.18% | 4.83% | | Energy | 37.24% | 21.07% |
“With no signs of inflation broadening beyond energy and food prices, we do not expect the Bank of Thailand to jump on bandwagon of central banks pivoting to normalize policy, with the economic recovery in Thailand lagging peers,” Nomura Holdings Inc. analysts Charnon Boonnuch and Euben Paracuelles said in a note.
Nomura expects the Monetary Policy Committee to vote unanimously to leave the benchmark interest rate unchanged at a record low 0.5% on Wednesday. The panel will continue to signal a dovish tone, “with BOT maintaining its pro-growth stance and reiterating that supporting the recovery is still its top policy priority.”
Finance Minister Arkhom Termpittayapaisith urged the rate panel to ensure that local interest rates are not too high as the economy recovers and still faced challenges from high inflation and the broader fallout of Russia’s invasion of Ukraine.
Inflation may accelerate in June as continued increase in fuel prices have raised the costs of transportation and logistics and a weak baht has driven up the price of imported raw materials and products, Trade Policy and Strategy Office Director-General Ronnarong Phoolpipat said.
For now, fiscal policy has led efforts to keep prices in check. Prime Minister Prayuth Chan-Ocha’s government has cut subsidies for diesel, the main fuel for transportation.
“There remains immense pressure on inflation as fuel and energy costs continue to climb further,” said Ronnarong. “We just wish that the OPEC’s oil production increase will start to bring the prices of crude down.”
(Updates with comments from analyst from fourth paragraph.) |
