By Suttinee Yuvejwattana
Nov. 2 (Bloomberg) -- Thailand’s consumer prices rose for the first time in 10 months in October as the nation began to recover from its recession and oil prices rose.
An index of consumer prices climbed 0.4 percent from a year earlier last month after declining 1 percent in September, the Commerce Ministry said today. That matched the median estimate of 12 economists in a Bloomberg News survey.
“The index has started to normalize,” Permanent Secretary for Commerce Yanyong Phuangrach told reporters in Nonthaburi province on the outskirts of Bangkok. “This indicates that people have more confidence in the economy and have started spending more.”
The Bank of Thailand raised its 2009 economic forecast last week after a decline in exports eased and consumer confidence rose to an 11-month high in September. The central bank kept the benchmark interest rate at a five-year low of 1.25 percent for a fourth straight meeting on Oct. 21, saying the nation’s recovery remains “fragile.”
“Consumer prices will move up from now as oil prices rebound,” said Isara Ordeedolchest, an economist at KTB Securities Ltd. in Bangkok. “But the inflation pressure is still benign and won’t be a concern for the medium term. The central bank may raise the key rate in the second quarter next year at the earliest as any quick change in policy may interrupt the economic recovery.”
Rates ‘Appropriate’
Asian nations from South Korea to Malaysia refrained from following Australia in raising borrowing costs last month as they sought to sustain their economies’ emergence from the global recession. The Bank of Thailand’s key interest rate is at an “appropriate level” to support the economic recovery, Deputy Governor Bandid Nijathaworn said Oct. 30.
“We think the government will continue to spend money to stimulate the economy and the central bank will maintain its low interest rate,” Yanyong said. “People have started to spend money and this will drive manufacturing. Companies will have more confidence to start new investments and hire more staff.”
Consumer prices may rise more than 1 percent this month from a year earlier and climb 1.5 percent in the fourth quarter, Yanyong said. The inflation rate may rise to a range of 3 percent to 3.5 percent in 2010 after averaging zero to -1 percent this year, he added.
Consumer prices are forecast to contract as much as 1.5 percent this year before rising 3.5 percent to 5.5 percent in 2010 as the economy recovers and oil costs climb, the central bank said Oct. 29.
Oil Prices
The $261 billion economy shrank 4.9 percent in the second quarter from a year earlier, less than a 7.1 percent contraction the previous three months. The central bank said Oct. 29 the nation’s gross domestic product probably declined 3 percent to 3.5 percent from a year earlier in the third quarter, and may resume growth this quarter.
Oil rose above $80 a barrel for the first time in a year last month. PTT Pcl, the nation’s state-owned oil company, raised the prices for its retail petroleum products four times last month. The country’s inflation rate is sensitive to oil- price movements as Thailand imports almost all of its fuel.
Thailand’s core inflation index, which excludes fresh food and fuel, fell 0.1 percent last month from a year earlier, the Commerce Ministry said.
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net
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