Bangkok: Thailand’s inflation accelerated for a second straight month in September, moving closer to the central bank’s upper limit as severe flooding adds to the risk of higher food prices.
The consumer price index rose 2.82% in September from a year earlier, accelerating from 2.53% in August, Commerce Ministry data showed yesterday. Still, the reading was below the 3.1% median estimate in a Bloomberg survey of economists.
Despite the pick-up, inflation remains within the Bank of Thailand’s 1% to 3% target range but brings it closer to the upper bound after a prolonged period of subdued price pressures.
Higher oil and processed-food prices drove much of the acceleration, reflecting elevated raw-material costs and the conflict in the Middle East, according to Nantapong Chiralerspong, director-general of the Commerce Ministry’s Trade Policy and Strategy Office.
Prices of eggs, chicken, vegetables and fruit also increased as changing weather conditions affected supplies.
Food and energy together make up the largest share of Thailand’s consumer-price basket, making households particularly sensitive to swings in oil prices and disruptions to agricultural supplies.
Those pressures are unlikely to fade quickly. The ministry expects inflation to continue accelerating in the fourth quarter as elevated oil prices feed into transportation and processed-food costs.
Recent flooding is expected to add about 0.1 percentage point to inflation by disrupting fresh-food supplies. The ministry now expects full-year inflation of 1.8% to 2.2%, compared with its previous range of 1.5% to 2.5%.
Thailand is facing similar price pressures to other energy-importing economies in the region.
Inflation in the Philippines accelerated for the first time in five months in September and remained above its central bank’s 3% target after the Middle East conflict drove up global oil prices.
For Thailand, floods are emerging as an additional risk.
Severe inundation in Bangkok and dozens of provinces has disrupted transportation and businesses, while further heavy rain could damage crops and complicate food distribution, putting upward pressure on prices.
The acceleration is unlikely to materially change the Bank of Thailand’s policy stance for now.
Officials have signalled they are prepared to look through temporary price spikes while maintaining support for the economy. — Bloomberg
