Chart, CPI : inflation at +9,2 % in july

Inflation is at 10 years high.

The CPI index reached 128,1 in july… That’s a 9,2 % increase compare to july 2007 (117,3).

source Bureau of Trade and Economic Indices.

Due to base effect (CPI was at 116,7 in august 2007), it’s easy to forecast the inflation next month… With the same reading than july (128,1) it would make a 9,8 % increase.

But the sharp drop of gasoline prices (thanks also to taxes cuts decided end of july, read here) will ease the result.

And let’s not forget that the government is doing everything it can to postpone many prices increases.

4 Responses to “Chart, CPI : inflation at +9,2 % in july”

  1. 1 MSB 11 August 2008 at 8:32 am

    Retail price is diesel down about 20% in past month i think. How much impact will this have? Could it be that inflation indeed does not reach the dreaded “double digit”?

  2. 2 ThaiCrisis 11 August 2008 at 8:38 am

    I agree. We will certainly avoid the double digit. Furthermore, it’s a “political level”… the tax cuts on fuels (diesel + gasohol) are going to help. I’m sure the gvt will do everything it can to avoid it.

    However, the PPI reached +21,2 % in july y-o-y (chart on line here tomorrow).
    This is really a bad figure (+10 in China in july, +8 % in EuroZone in june).

    So it remains to be seen how the businesses are going to cope with those strong pressures.

    On a broader level, I see that some investments indicators are not doing well. For instance sales of commercial cars in june (I will update the chart wednesday). We have a drop to 29 540, that’s a drop of 21 % compare to june 2007. We have to go back to january 2007, august 2004 and january 2004 to see lower figures…

  3. 3 fdl 15 August 2008 at 11:22 am

    Thai inflation at 9.2% is nearly nightmarish. Your other article about lagging indicator Producer Prices Index rising by 20% should be sending chills to every Thai.

    And around the world oil and commodity prices have soared, only with some respite after oil dipped from its peak of $147/barrel now to around $112.

    All these inflation, including Thailand’s, must have a result of too much US dollars flooding the economies of the world.

    I can see only more inflation ahead because the expansionary money theme remains strong.

    Sadly PM Samak’s government does not seem to have any clear policy on how to address Thailand’s dangerous inflation issue.

  4. 4 ThaiCrisis 15 August 2008 at 12:06 pm

    Hi FDL. At last someone who appreciates my analysis !

    Indeed, the PPI are a strong signal. A bad one.

    I have to say that currently it’s difficult to fight the mainstream views : “the economic slowdown will reduce inflation in the coming months“.

    This is the mantra repeated ad nauseam.

    And indeed, oil is falling, and other commodities too (copper, wheat etc.)

    But beware of base effect (at 110 USD, oil is still expensive) and scale of timeline (to have a sharp correction on a few weeks after a rallye of several months is not surprising).

    On the other hand, if we speak about China for instance… this country continues to print massive amount of RMB to sterilize the mountains of the USD it earns from exports (the trade surplus continues to grow in China !).

    And the last figures about investments show a continuous growth.

    And the last figures about wages are alarming too.

    I mean : the slowdown is obvious (now) in Europe, and it will appear in the US on Q3… but China still enjoys a very strong growth.

    Deflation or Inflation… prices or money supply… the debate is very complex and like a diamond has dozen of faces.

    As for myself, I see a clear stagflation for Europe/USA, with some parts of strong deflation (real estate, financial bubble) and parts of inflation.

    Before the world was much easier to understand. We had the rich West+Japan and… all the rest. Times were good. 😉

    Now, I think we continue to underestimate the power of disruption/mess of China and its hundred of millions of citizens (+ all the BRIC) on many classic economic mechanisms and analysis.

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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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