The Kingdom’s consumer price index (CPI) rose 4.3 per cent year-on-year in January, the highest record in 18 months since 2006.
Commerce Permanent Secretary Siripol Yodmuangcharoen said yesterday that the high CPI derived from increasing prices of food and beverages which expanded 4.8 per cent. Non-food items also soared 3.9 per cent.
However, CPI in the month increased only 0.8 per cent compared with December last year. (Nation)
It’s exactly the scenario I’ve described before : base effect.
CPI figures were low on the first semester 2007. Therefore, in 2008, with year on year comparison, CPI will be much higher.
This process is fueled also by several prices hikes that are coming slowly but surely (thai authorities are doing everything they can to postpone). Therefore the upward pressure on CPI will probably last the whole year.
Prices are going up, because costs are going up (energy, and other commodities) and also due to the exchange rate manipulation (the BOT tries to curb the appreciation of the THB). A strong THB would of course alleviate the energy bill of the country for instance. But it would be a threat for exports… That’s the trap.
Anyway, as far as inflation is concerned, the new government has clearly decided its side : prices controls and other populist policies, designed to give to people a quick short term fix of dope, in order to prepare the return of Thaksin and the next elections.
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