Consumer prices surged in February, driven by fresh food, some farm products and oil prices.
Yesterday the Trade Policy and Strategy Office under the Commerce Ministry reported that the consumer price index (CPI), which gauges headline inflation, rose by 0.73% year-on-year in February, accelerating from 0.27% in January and 0.36% in December 2018.
The increase was largely due to fresh food prices, especially for rice, livestock products, eggs and milk, and higher domestic oil prices.
On a month-to-month basis, prices rose 0.24% in February after contracting 0.02% in January.
Core CPI, which excludes volatile food and energy prices, rose 0.60% year-on-year last month, easing from 0.69% in January.
Of the 422 product and service items used to gauge inflation, the prices of 227 items such as milled rice, eggs, poultry, shrimp, liquefied petroleum gas (LPG), processed food, and medical and personal care services rose last month. No price changes were registered for 81 items, while 114 items saw prices drop.
For the first two months, the headline inflation rate averaged 0.49% from the same period last year, with core inflation at 0.64%.
Pimchanok Vonkorpon, the office's director-general, said the February inflation rate was a good sign because prices of many agricultural products such as rice, corn, tapioca, pork and eggs increased, boosting farmers' purchasing power.
The Commerce Ministry forecasts headline inflation to average 1.2% this year, in a range of 0.7-1.7%.
The forecast was made assuming GDP would grow in a range of 3.5-4.5%, with crude oil prices averaging US$70-80 a barrel and an exchange rate of 32.50-33.50 baht to the US dollar.
"The ministry set an inflation rate target of 0.67% in the first quarter," Ms Pimchanok said. "We expect the upcoming general election to boost wood and construction material prices."
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce, said the inflation rate reflected higher agricultural prices, but core inflation stood at 0.6%, showing fragile purchasing power from slowing trade and exports.
"The inflation rate is not too high, in line with economic prospects," he said. "There is no pressure for the Bank of Thailand to raise the policy interest rate."
Mr Thanavath urged the government to accelerate spending on infrastructure projects to stimulate the economy.
