Thai inflation to average 3.4 percent

The ministry spokesman said the consumer price index rose by 3 percent year-on-year in December. For the last quarter, it gained 2.8 percent, driving overall inflation for the year to 3.3 percent.

In the first half of last year, the price of oil rose in line with the global trend. Prices also increased for rice, eggs, pork, fruits and rents.

Full-year gross domestic product in 2010 was expected to show 7.5 percent growth. Inflation was driven by a 5.6 percent rise in food and beverage prices, in turn spurred by a rise of 8.3% in the prices of rice and rice powder and 4 percent for meat, he said. The inflation forecast is based on assumptions of Dubai crude oil averaging US$78-88 a barrel and the baht trading at 28-33 to the US dollar, he said.

Inflation is projected at 3.2 percent for the first quarter, with risk factors including the volatility of global oil prices, currency fluctuations and increasing global crop prices.

The ministry will continue to freeze the prices of some goods until March 31. It will consider a suitable price level for palm oil in the near future.

December's rise in inflation has helped to fuel speculation the central bank will raise interest rates further.

The central bank raised its one-day bond repurchase rate three times last year, by 25 basis points each time, to 2 percent. It will hold another policy meeting next Wednesday, January 12.