INFLATION

Weak oil will depress rate

PHUSADEE ARUNMAS

The Commerce Ministry yesterday revised down the forecast for this year's headline inflation rate, as measured by the consumer price index, to 1.5% to 2.5% from 2.5% to 3.5% earlier. The ministry's previous 2007 forecast, made in December, was based on an average Dubai crude oil price of $60 per barrel.

''But prices in the past month have declined to around $51 or $52 now with a trend to fall further,'' said Karun Kittisataporn, the ministry's permanent secretary.

Last week, the Bank of Thailand trimmed its inflation forecast to a range of 1% to 2% from 1.5% to 2.5% earlier.

Mr Karun said the revision was based on key economic factors, such as 4.5% GDP growth, an average baht exchange rate of 35 to 36 per US dollar, central bank interest rates of between 4.25% and 4.75%, crude at $50-60 per barrel and retail oil prices at 23-26 baht per litre.

He said the low inflation rate would not have an impact on the economy and was one indication that the Thai economy is back to where it was before global oil prices started climbing in 2004. That year, headline inflation was 2.7%. It rose to 3% in 2005 and 4.7% last year.

He believed the inflation rate would peak in the first quarter and decrease and stabilise in the third and fourth quarters at 1% or less.

The January Consumer Price Index (CPI) rose 3% year-on-year, but fell 0.3% from the previous month due to a falling food and beverage as well as non-food prices.

Bangkok Post
Friday February 02, 2007