Archive for the 'Inflation/CPI' Category

Recovery Green Shoots Salad : producers told to freeze their prices… for 3 months

Ironic beauty of the thai political system : Thaksin ? The Junta ? Samak ? Somchai ? Abhisit ? Different views and bitter political feuds ?

Bullshit.

The same lunatics, the same family, as far as the economy is concerned.

Let’s take the latest example. The current (ah ah ah) Commerce Minister (check here for her impressive background)

“Although the economy is already beginning to recover, this is not the right time to adjust the product prices yet because it would increase people’s spending burden,” Mrs Portiva said.

“I would like the producers to freeze their product prices for at least three more months to maintain the inflation rate at 3.5 to four per cent.” […]

Mrs Porntiva said her ministry would ask the cabinet to watch price movements of 40 items under the goods and services control programme plus more than 200 other items on a special watch list to prevent manufacturers from raising prices unnecessarily to the public detriment. (Bangkok Post)

It’s a cut and paste of the inane and short sighted policies designed by Samak, during the Great Inflation Fear (in 2008, remember with peak oil prices at 140 USD in july 2008) ?

Miss Porthiva is as stupid as her predecessors (check my inflation category in 2008, it was a true festival at that time, read here and there and here).

What’s the point to save “3 more months” ? Oh yeah… you remember, we are supposed to endure scary political fightings before april ? How convenient. πŸ˜‰

Anyway. Porthiva should stop talking, and should stop mixing economy with cheap politics and with issues she obviously doesn’t understand.

She wantsΒ  more prices controls ? Sure, have a look at Venezuela. Same causes will lead eventually to the same effects.

Anyway 1 year and a half after the fall of Samak, and after a deep economic crisis, the so called Abhisit government is doing exactly the same than their alleged political opponents :

-stimulus, subsidies
-free programs, hands outs
-mega projects as red herrings
-prices controls

etc. It’s easy : take the headlines of newspapers and just change the names of the so called ministers.

Oh and by the way… It would be interesting to hear some comments from Korn, the smart, young, witty (Abhisit’s buddy) and so modern Finances Minister (of the year !).

How can he look himself in the mirror while the Commerce Minister supports prices controls, like in a good old style soviet country ?

Chart, Producer Price Index : -10 % in june

At last a good negative stat ! πŸ˜‰

The Producer Price Index is down 10,54 % in june, compared to june 2008.

PPIJUNE20092

I know… I didn’t speak about CPI and PPI… for a long time.

Regarding the CPI, I said why (here)… And for the PPI, well the trend was too obvious (explained here).

But I feel a little update is necessary.

I wrote in february about PPI :

Due to the base effect, we are going to get in the coming months extremely negative values (in % of difference, year on year)…

This is the -10,54 % we have had in june.

Remember, summer 2008…. the Peak Exports… the Peak CPI… the Peak Olympics…the Peak everything… before the big bubble burst… Oil prices were burning… and were infecting a whole range of products due to higher costs.

Barrel was at 150 USD… And today 70… So of course, PPI is going down, year on year.

The item “Petroleum Products” (8 % within the index) is crashing by 44 %. “Food products, beverages, tobacco” (15,9 % of the index) is down 0,8 %.

Only fools look at those figures with fear : lower prices are good for everybody.

What the fools do not understand is that our modern economy is by essence deflationary… it’s called productivity : we do more with less, therefore “prices” (per unit) should go down.

Only the fools are calling for “inflation” (of prices)… Just to save the current order… Just to save their positions and the banks…

Deflation is good. Deflation favors savings and work.

Inflation is for the messy politicians, the debts lovers, the addicted to bubbles and cheap money.

(Source Bureau of Trade and Economics Indices)

Inflation : PPI at -2,50 % in january

The CPI has been tampered (read my article)… But hopefully they didn’t mess up with the PPI (Producer Price Index).

In january, PPI was at 143,2 points, a decrease of 2,52 % compared to january last year…

But compared to december, the PPI increased by 0,7 %.

ppijan

Due to the base effect, we are going to get in the coming months extremely negative values (in % of difference, year on year)… because last year we had extremely high values.

This is why it will be more interesting to focus on the evolution month-on-month, along with the details (we all know for instance that prices of products related to oil are crashing… it’s not really an information. But wholesale prices for crops are still 8,1 % higher compared to january last year etc.).

(Source Bureau of Trade and Economics Indices and details of the report)

Inflation, CPI : bravo, they broke the thermometer

Thailand’s inflation in January fell marginally by 0.4 per cent year-on-year, its first decline in more than nine years, according to Siripol Yodmuangcharoen, Permanent Secretary for Commerce. (TNA)

Bravo Thailand ! Right in the middle of a full blown crisis, the stupid bureaucrats had a great idea : to change the thermometer of inflation…

When they started to talk about it, I didn’t believe them. But it’s done.

For the CPI report of january, they have changed the base year for the calculation of the index… (from 2002 to 2007) and they have changed (this is much worse) the relative weight of each item.

For instance :
BEFORE : Food and beverage = 36 % of the index
AFTER : Food and beverage = 33,01 % of the index

BEFORE : Transportation and communication = 21,98 %
ATFER : Transportation and communication = 26,80 %

The result ? Since oil prices are crashing… and since the transportation item has more weight… the effect on the total CPI is greater… AKA inflation rate is going down… more with the new system, than with the old one.

Double whammy with food : food prices are still high compared to last year… but this group has less weight in the new index, therefore the effect on the CPI is mechanically reduced.

Convenient for the clowns, huh ? !

Hopefully, ThaiCrisis is aware. And is watching.

Here is the new serie, with the old one. A red dot on the lines that have changed… All of them… excepted 2 items…

newcpi

I mean, if they were serious they should give (at least during a few months) the old calculation along with the new calculation, or an Excel file with all the data, so we could do it ourselves.

But better to blind people.

I can’t use my chart anymore, we can’t make forecast using the readings of the previous months to anticipate the year on year difference in %, we can’t make comparison on a long time scale.

(Source Bureau of Trade and Economics Indices)

Inflation, CPI: +0,4 % in december and +5,5 % for the year

cpidec

Consumer Price Index reached 119,5 against… 119 in december 2007. Therefore, it’s an increase of 0,4 %.

For the whole year, inflation rate is 5,5 %.

The Bangkok Post writes : “December inflation hit 76-month low”.

It’s of course misleading… Base effect and the sharp drop of oil prices and the subsidies (since august, free water, free electricity, subsidy on diesel etc.) explain this result.

But if we look at the details… we see that the group “Food and Beverage” (with a weight of 36 % in the index) has increased by 13,9 % year on year.

“Electricity, fuel, water supply” (5,10 % of the index) plunged by… 37,3 %. πŸ˜‰

cpidetail

For that matter, it’s easy to forecast a negative inflation rate (particularly on Q2 of 2009).

The good news is the sharp fall of PPI (producer price index).

(Source Bureau of Trade and Economics Indices)

Chart, inflation : CPI and PPI drop in november

Okay folks, back to business. Enough of talking about airports ! πŸ˜‰

Consumer Price Index and Producer Price Index reports for november have been published (source Bureau of Trade and Economic Indices).

The CPI slowed to +2,2 % (year on year = compared to november 2007), from +3,9 % the previous month.

For the PPI the fall is even more spectacular : 1,86 %, against 8,47 % in october !

cpinov

Why ? How ? There is only one reason : the crunch of oil prices.

But if we look at the details of the CPI report, we see :

-the group “Food and beverages” (= 36 % of the index) has increased… by 15,4 % in november compared to november 2007… And it has even increased by 1 % between october and november (month-on-month).

So watch out : yes the inflation pace is droping like a stone, thanks to energy prices. Drivers are happy. But the prices of food are still high. Much higher than one year ago.

-another group “Housing and furnishing” (= 23,86 % of the index) is droping big time year-on-year (-7,7 %) thanks to the sub-group “electricity, water”… But it’s artificial thanks to the “Samak rescue package” end of july (tax cut on diesel, free water and free electricity, read here). It won’t last.

Chart, inflation october : CPI at +3,9 % and PPI at +8,5 %

Consumer Price Index and Producer Price Index reports for october have been published (source Bureau of Trade and Economic Indices).

cpippioct

Good news : the pace of inflation is decreasing.

CPI = +3,9 % compared to october 2007
PPI = +8,5 % compared to october 2007 (spectacular drop, from +19 % in september !)

That’s a good news indeed. Particularily on the PPI front.

But if the % of inflation, the pace, is declining year on year, compared to the previous months… it’s important to remember that prices remain… high in absolute values.

Here is the CPI with values and % of change.

cpioct2

We have some margins before to see a real deflation, AKA a general fall of prices…


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.