Inflation : CPI at +8,9 % in june

Here is the chart of Consumer Price Index with the (just published) june’s datas.

+8,9 % compare to june 2007, versus 7,6 % in may.

The index is at 127,7, versus 126,2 the previous month.

Core CPI (food and energy excluded) is at +3,6 % year on year.

I can already tell you that the CPI in july will be minimum at +8,9 %. And certainly equal or higher than 9,3 % (how ? Easy : base effect. Just copy the value of june for july, and compare with july 2007…).

And that in august, we will have +10 % (mark my words).

It’s the inflation tsunami on the move.

Prices of more products and services are about to increase in the coming weeks and months… despite all the tricks, postponements, delays used by the government.

Will the BOT increase interest rates (real rates are negative since way too long, look the chart here) but then fuel a recession ? Stay on hold ? Cut ? But that would send the THB to the toilets and increase the energy bill (imports of oil) ?

Checkmate.

All the other central banks face the same dilemna, more or less. πŸ˜‰

So what can we do ? I don’t know.

I know however that the whole story about “speculators” is bullshit.

And I know that the only way to really break the inflation is to really break the demand (of everything, from gasoline, raw materials, to new cars, to condos, houses, from steel to cheap loans… everything).

And the only way to really break the demand is to have… a real recession. A dirty one. A nasty one.

Of course, this idea isn’t very popular… πŸ˜‰

I remind you that we have dozens of millions of people (and soon hundreds if we continue with the growth rate) who were driving bicycles 15 years ago… and who now want (and can afford) cars

O course it’s a very rough summary of the situation…

But this very simple fact is highly inflationary… Difficult to deny it.

Don’t get me wrong : I don’t blame the chinese and the indians (and many others). Their behavior is perfectly normal. We certainly would do the same. I would.

8 Responses to “Inflation : CPI at +8,9 % in june”


  1. 1 bill 1 July 2008 at 9:45 am

    Do you have any good news for us? I’m planning a vacation to arrive in two months…

    By the way, I very much appreciate your website and consider myself quite lucky to have found it.

    cheers.

  2. 2 ThaiCrisis 1 July 2008 at 9:51 am

    Yes, dear Bill, I do have a good news : the weather is nice.
    πŸ˜‰

    Seriously, you should not be scared : as a tourist (or maybe I misunderstood) you can enjoy the best of Thailand, and not worry about all the other issues.

    If you’re a resident in Thailand, then of course it’s another story.
    πŸ˜‰

  3. 3 bill 1 July 2008 at 10:20 am

    My situation is a combination of both worlds…I am a tourist in that I work outside of Thailand, but my ladyfriend is Thai. I’ve been wondering why she’s been spending more money over the past few months…

    I know this is a little off topic with regard to this post, but where do you see the THB/USD headed. We are up to 33 in a very short period of time. If the US Fed raises rates later this year like they might/should and we (USD holders) get a bounce, do you see high 30’s or even 40’s in the future, barring any other outside events? With Thailand’s high inflation, I would think their currency is undervalued (barring the high price of oil). As you can tell, I’m confused…LOL.

    One thing I know for certain; I will have a fun vacation regardless of how much it costs me!

  4. 4 ThaiCrisis 1 July 2008 at 11:18 am

    That’s the multi billions question.

    I was bullish on THB during end 2006/2007.

    But since march 2008… things have changed… The THB is going south… not because USD looks really better (this hasn’t changed : USD is still heading towards… the toilets)… but because of a blackswan : oil prices (to summarize).

    I was the first to write that inflation would be higher in 2008 than 2007… then the first to speak about inflation tsunami.

    https://thaicrisis.wordpress.com/2007/10/14/chart-cpi-per-group-of-change-y-o-y-per-quarter/

    https://thaicrisis.wordpress.com/2008/04/22/the-inflation-tsunami-is-coming/

    But of course, no one could have predicted oil at 140 USD (remember : 50 USD in january 2007, 90 USD in january 2008).

    This is going to lead to very high inflation… plus the issue of the energy bill (thailand consumes and imports a lot of oil, compared to its GDP)… trade deficit… current account deficit.
    Plus the fact, that exports could slow down too. All those points are bearish for THB.

    So my point : USD has structural problems, that can’t be fixed in my opinion (and you can be sure that Bernanke won’t increase rates…) But on the other hand… THB too (plus the political problems… can you imagine a new coup ?) !

    So, it’s like to predict which nag is going to win… ! πŸ˜‰

    I’ve got no freaking idea.

    You’re not alone to be confused or lost.

  5. 5 bill 1 July 2008 at 12:11 pm

    LOL.

    Well put: “So, it’s like to predict which nag is going to win… ! “

  6. 6 hermano 2 July 2008 at 7:31 am

    Long time reader, first time poster. Great site. You’ve done a fantastic job at updating us with fresh information while providing interesting commentary. One question I had about the following:

    “I can already tell you that the CPI in july will be minimum at +8,9 %. And certainly equal or higher than 9,3 % (how ? Easy : base effect. Just copy the value of june for july, and compare with july 2007…).
    And that in august, we will have +10 %”

    Are you suggesting that if the index remains at 127.7 for July, then the year over year inflation rate (July 07 to July 08), will be equal to or higher than 9.3%? It seems that could only be the case if the index fell between June 07 to July 07.

  7. 7 ThaiCrisis 2 July 2008 at 7:48 am

    Exactly hermano. At last, someone is looking at the details !

    It’s very easy to make accurate forecasts… Base effect.

    June 2007 :117,3
    July 2007 : 117,3
    August 2007 : 116,7

    Now… It’s currently IMPOSSIBLE to assume that the index can decline in july 2008 compare to june 2008 (127,7). Why ? Because many other prices are going to increase : taxis fares, LPG, airlines fares etc. This is what I’ve called the “inflation tsunami”…

    Many businesses are about to increase their own prices… They can hold it anymore. This tsunami is going to fuel inflation… for the whole year.

    So, with the same reading at 127,7, we would have minimum +8,9 % y-o-y in july (same than june).

    Now… I keep the same idea for august… Base effect, because august 2007 was lower… therefore, with the same index than june (and july) that would make +9,3 %.
    πŸ˜‰

    You understand now why I’m very upset against all the thai “authorities” and all the bozos at the gvt : even a child could make those calculations !

    I was the first to speak about the base effect LAST OCTOBER, predicting that mechanically inflation rate would be higher in 2008 than 2007.

    Anyway… at that point, they go to the temple and light candles every single day… they pray for the oil prices to go back to 20 USD per barrel…

    They’re going to need a lot of candles. πŸ˜‰


  1. 1 BKK News Feed Archive - Q2/08 Trackback on 3 July 2008 at 3:04 pm

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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