Thailand’s core consumer price index (CPI) index has increased by 0.39 per cent year-on-year in July, signalling that domestic purchasing power is recovering, said the Ministry of Commerce (MOC) on Thursday.
Pimchanok Vonkorpon, the director-general of MOC’s Trade Policy and Strategy Office, said core inflation rose by 0.39 per cent year-on-year to 102.92 index points in July and increased by 0.41 per cent when compared to June.
This is because the prices have increased along with people’s purchasing power, while June’s core inflation declined by 0.05 per cent year-on-year.
After seven months into 2020, the country’s core inflation index increased by 0.34 per cent year-on-year.
“Core came back to the positive front in July to reflect the recovery of purchasing power which is a good sign,” she said.
“At the same time, all of the indexes including CPI, PPI (Producer Price Index) and CMI (Construction Materials Price Index) have increased from June to July, signalling that the economy is gradually recovering, but it would not be a rapid recovery,” she added.
For headline CPI, the index fell by 0.98 per cent year-on-year to 101.99 in July but less than the contraction of 1.57 per cent in June.
After the first seven months into 2020, the country headline inflation contracted by 1.11 per cent year-on-year.
“The improvement in headline inflation over the past two months is in line with the improvement of demands within the country,” Pimchanok said.
“Value-added tax collection from domestic consumption, the sales of cement, PPI, CMI along with the sales of motorbikes and commercial vehicles have all increased and this shows that domestic demand has significantly picked up,” she added.
For August, Pimchanok said the ministry expects headline inflation to continue to improve as the outbreak situation in the country has also improved thanks to the government’s measures to stimulate domestic tourism, which is worth 22.4 billion baht.
However, the possibility of a resurgence in infections, the fluctuation in global energy prices, and the slump in the global economy are still possible challenges for the remainder of 2020.
The worst drought in 40 years, which has now caused flooding in many provinces, could also continue to hamper purchasing power, she added.
For the full year, the ministry expects the headline inflation for 2020 to be in the range of -1.5 per cent to -0.7 per cent or basically a contraction of about 1.1 per cent.
The Bank of Thailand said headline inflation could return to its target of 1-3 per cent in 2021 due to the prediction the economy will recover to an expansion of at least 5 per cent in the same year, in comparison to the expected recession of at least 8 per cent in 2020.
