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Thai inflation at 10-year high


July 2, 2008

Thai inflation at 10-year high
Thailand's inflation rate surged to a 10-year high of 8.9 percent in June, driven by sharply rising oil prices, AFP quoted the commerce ministry as saying Tuesday.

Fuel prices in Thailand rose 44.5 percent year-on year in June, while food costs were up 11.4 percent, the ministry said in a statement.

But the overall increase in food prices masked a steeper rise in prices for the staple grain rice, which jumped 35.8 percent, while pork costs jumped 31.6 percent.

For the first half of the year, inflation was at 6.3 percent, due mainly to rising fuel costs, the ministry said.

Thai inflation had already jumped to a 10-year high of 7.6 percent in May, and a central bank official warned Monday that the figure could reach double digits in July and August.

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The inflation figures exceed Thailand's projected range of 5.0-5.5 percent for the year, and the commerce ministry warned that the forecast may have to be revised higher if global oil prices remain high.

"We still maintain our projection for Thailand's inflation rate at 5.0-5.5 percent this year," the ministry's deputy permanent secretary Pairoa Sudsawarng told reporters.

"But we may adjust the rate up to 7.0 percent if the oil prices remain over 120 dollars," he said.

The Bank of Thailand's monetary policymakers meet on July 16 to consider whether to raise interest rates to rein in inflation, amid growing expectations that rates will rise.

The bank's benchmark rate has been unchanged at 3.25 percent since August.

The bad inflation news comes as confidence is already weakening in Thailand due to five weeks of protests against the government of Prime Minister Samak Sundaravej, whose election in December ended more than a year of military rule.

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