Thailand's Inflation Accelerates in January

By Nopparat Chaichalearmmongkol 

BANGKOK--Thailand's consumer-price index rose 1.93% on year in January, accelerating slightly from December's 1.67% increase, Commerce Ministry Deputy Permanent-Secretary Urawee Ngowroongrueng said Monday.

Core CPI, which excludes volatile energy and food costs, was up 1.04% on year in January--still within the Bank of Thailand's target inflation range of 0.5% to 3.0%.

"The slight increase in Thailand inflation has been in line with slow economic conditions," said Ms. Urawee, who brushed aside concern over the possibility of Thailand entering deflation.

From December, the CPI rose 0.42% while core CPI edged up 0.21%.

January inflation was greater than market forecasts. A Wall Street Journal poll of economists had projected the CPI to rise 1.735% on year and 0.23% on month.

Prices gained on the back of rising consumer spending during the festive holiday season, as well as the Lunar New Year, said Kasikornbank head of Capital Markets Research, Kobsidthi Silpachai. However, he warned the rise might not last for long.

"The effect should be short-lived given consumers still postpone spending for big-ticket items amidst heightened political uncertainties as well as high levels of household debt," Mr. Kobsidthi said.

For 2014, the commerce ministry forecasts inflation to range between 2.0% and 2.8%, providing that Thailand's economic growth rate is at 3.0%-5.0% and the government continues various subsidies to ease the rising cost of living, Ms. Urawee said.

Inflation will average 2.0% in the first quarter of 2014, she said.

"The outbreak of political turmoil, dampened consumer and business confidence, and a sluggish domestic economy should ease price pressure in the next few months," Kasikornbank's Mr. Kobsidthi said.

Write to Nopparat Chaichalearmmongkol at [e-mail]