October inflation at 2.5%

The Nation (2 November 2007)

Cost of oil, food adds to pressure
Year-on-year inflation came in at 2.5 per cent last month, due mainly to skyrocketing oil prices and increasing food and consumer-goods prices, the Commerce Ministry said yesterday.

The comparable September figure was 2.1 per cent. The Consumer Price Index increased 2.1 per cent year on year in the first 10 months. Despite oil prices tending to climb, the ministry remains confident the full-year rate will not exceed the projected 2.5 per cent. Commerce permanent secretary Siripol Yodmuangcharoen yesterday reaffirmed that inflation would remain under control and be as low as the ministry's target, because the average oil price remained within the ministry's projection, thanks to the strengthening baht. "Inflation in the remaining months should increase 2.5-3 per cent, which would ensure that accumulated inflation did not grow beyond the projection," he said. The ministry's inflation forecast assumes that the Dubai oil price will not exceed US$65 (Bt2,200) per barrel, while the average oil price in the first 10 months was $64.97. On Wednesday, the oil price surged to $80.71 a barrel. However, the appreciation of the baht kept the domestic price, which directly affects consumer-goods prices, within the ministry's projection. The baht stood at 34.67 to the US dollar, while the ministry's forecast assumes the baht will range between 35 and 36 to the dollar. The domestic oil price, which averaged Bt27 a litre in the first 10 months, was also within the ministry' projection of Bt28 a litre. Siripol said food and consumer goods - the major weight in the inflation figures - would also remain under government control for the rest of the year. Some food and consumer-goods prices will increase in the remaining months, but that should not cause inflation to soar, he said. Seasonal prices of agricultural products like rice, sticky rice and vegetables are also set to decline, because of the arrival of the harvest season, Siripol added. Prices in the food and beverage sector increased 1.3 per cent last month from September, due to the price of vegetables and fruit rising 5.5 per cent during the vegetarian festival. Prices in the non-food and beverage sector also increased 0.5 per cent in October. With fuel costs up 3.1 per cent from September, public transport costs rose 1.5 per cent despite a slight 0.7-per-cent drop in electricity costs. In addition, the ministry reported core inflation last month rose 1 per cent year on year and 0.3 per cent from September.