Inflation in September likely to continue upward trend of last few months
Supply pressure on veggies and fruit following recent floods among key factors, says trade policy office
The general inflation rate for September is expected to see a slight increase over August, likely ranging between 0.5% and 0.7%, according to Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office (TPSO).
Key factors contributing to the rise in inflation include higher domestic diesel prices, which were capped at 33 baht per litre, year on year, and the impact of flooding that has driven up prices of fresh vegetables and fruits due to damage to some cultivation areas.
These effects are anticipated to be short-term, Poonpong said, adding that geopolitical conflicts may lead to uncertainty in commodity prices and higher shipping costs.
On the other hand, factors contributing to a slowdown in inflation include lower household electricity bills compared to the previous year, thanks to government measures to reduce living costs. Furthermore, Dubai crude oil prices are slowly recovering or may decrease due to the global economy's slow growth, reduction in product prices, and competitive marketing activities by domestic wholesalers, retailers, and e-commerce businesses, resulting in continuous price reductions for many products.
Inflation for the last quarter of 2024 is expected to increase by 1.5%, primarily due to oil prices. The distribution of digital wallets to vulnerable groups in the form of cash is not expected to impact product costs or inflation but will help boost purchasing power.
In August, the general inflation rate was at 108.79, up 0.07% from July 2024 and 0.35% from August 2023. This marks a continuous positive trend for five months, although at a slowing rate.
The increase is mainly driven by higher prices for food items, particularly fresh vegetables and fruits due to heavy rainfall, as well as rice and prepared foods. Conversely, energy-related products such as gasoline and electricity prices have decreased.
Core inflation, excluding fresh food and energy, rose by 0.62%, slightly accelerating from 0.52% in July.
For the first eight months of 2024 (January-August), inflation increased by 0.15%.
The Ministry of Commerce continues to forecast the general inflation rate for 2024 at between zero and 1.0%, with a midpoint of 0.5%, which aligns with the current economic situation. Any significant changes in the situation would prompt a reevaluation, Poonpong said.
