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Thailand Slips Into Deflation on Falling Energy Prices

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  • Thailand Slips Into Deflation on Falling Energy Prices

    Thailand Slips Into Deflation on Falling Energy Prices
    Nopparat Chaichalearmmongkol
    February 02, 2015

    BANGKOK--Thailand entered deflation in January for the first time in more than five years due to falling energy prices.

    The country's headline consumer-price index contracted 0.41% in January from a year ago, compared with a 0.6% rise in December, the commerce ministry said Monday. The headline CPI in January also fell 0.59% sequentially.

    Thailand last fell into deflation in September 2009 amid falling oil prices and government measures to reduce living costs.

    The ministry attributed the fall in January's inflation to lower retail fuel prices and electricity charges, as well as cheaper fresh-food products.

    Economists polled by The Wall Street Journal had earlier forecasted a median 0.25% year-on-year fall and a 0.4% month- on-month drop in headline inflation.

    Core inflation, which excludes volatile food and energy prices, rose 1.64% from the previous year and 0.16% sequentially, compared with median forecasts of a 1.58% year-on-year decrease and a 0.115% month-on-month increase.

    "Although Thailand's headline inflation [entered] negative territory...it was due mainly to falling oil prices," said Usara Wilaipich, a senior economist at Standard Chartered Bank. She said core inflation, which reflects domestic demand, appeared to have risen, adding that lower headline inflation is positive for consumers' purchasing power.

    The commerce ministry has maintained its 2015 inflation target of 1.8%-2.5%, based on assumptions of global crude-oil prices between $90-$110 a barrel, gross domestic product growth of 3.5%-4.5% and the baht trading at 32-35 against the U.S. dollar.

    Somkiat Triratpan, director of the ministry's Trade Policy and Strategy Office, said the ministry would evaluate energy price movements before it considers any revision to the inflation target.

    nasdaq.com
    http://thailandchatter.com/showthrea...ll=1#post45112

  • #2
    Finance minister not concerned over negative inflation
    Suwit Rattiwan

    BANGKOK, 2 February 2015 (NNT)
    http://thailandchatter.com/showthrea...ll=1#post45112

    Comment


    • #3
      DOnt know about falling thai values. The Canadian Dollar has fallen off the board in the last couple of months'

      Comment


      • #4
        Originally posted by Delayed View Post
        DOnt know about falling thai values. The Canadian Dollar has fallen off the board in the last couple of months'
        Good thing my savings is in solid gold. I'm not incurring these cad losses

        Comment


        • #5
          Btw this article is hogwash. Falling prices and or appreciating currency is a good thing. But this is all Keynesian nonsense

          Comment


          • #6
            Falling prices won't change monetary policy yet: Thai central bank
            3 Feb


            Thailand's central bank said on Tuesday it was not considering adjusting monetary policy despite the first decline in consumer prices in more than five years, suggesting it may not cut interest rates next month as some analysts expect.
            PHOTO: BLOOMBERG

            Thailand's central bank said on Tuesday it was not considering adjusting monetary policy despite the first decline in consumer prices in more than five years, suggesting it may not cut interest rates next month as some analysts expect.

            The Bank of Thailand sees price declines as a short-term phenomenon, likely lasting only into the second quarter, and does not expect the country to fall into deflation, Assistant Governor Mathee Supapongse told reporters.

            The monetary policy committee "sees negative inflation as temporary. Monetary policy does not give priority to supply shocks, so the MPC has yet to think about adjusting monetary policy," he said.

            The country's headline consumer price index slipped in January for the first time since September 2009, falling 0.41 per cent year-on-year, mainly driven by falling oil prices.

            But the core rate, which strips out energy and food prices, was little changed at 1.64 per cent in January.

            With consumer prices falling and economic growth stubbornly sluggish, some analysts expect the central bank to cut its policy rate, which has stayed at 2.0 per cent since last March, when it next reviews policy on March 11.

            The military junta that took power in May to end prolonged political unrest has struggled to get Southeast Asia's second-largest economy back on track as exports are weak and domestic demand remains soft.

            Deflation has led to monetary easing elsewhere in the world, but Thailand's central bank held its interest rate steady at a policy meeting last week.

            Mathee said the BOT focused on inflation over the next one to two years, rather than current levels because it would take 6-12 months for a policy change to have an effect.

            The central bank this year switched to targetting headline inflation in a range of 1.0 to 4.0 per cent, having previously targeted the core rate.

            Mathee said actual inflation this year could be lower than the central bank's forecast of 1.2 per cent.

            Price declines are positive for Thailand's economic recovery, he said, adding prices were expected to increase in the second half of this year.

            Chaiyarit Anuchitworawong, executive vice president of Bangkok Bank, told Reuters he did not expect an impact from decreasing prices, believing the government will come up with stimulus measures to tackle it.

            Some think falling prices have done little to help. "Costs are lower but customers are more important and they are not spending much," said Benjarat Manakhantikul, a 45-year-old food shop owner in Bangkok.

            businesstimes.com.sg
            http://thailandchatter.com/showthrea...ll=1#post45112

            Comment


            • #7
              Look on the bright side. At least the government doesn't have to placate voters any longer with incentives and gifts.

              Comment


              • #8
                Thailand Posts Deflation for Fifth Straight Month in May

                http://www.morningstar.com/advisor/t...nth-in-may.htm

                BANGKOK-Thailand continued to register deflation in May, when the consumer price index slipped on falling oil, electricity and food prices.
                The headline consumer price index dropped 1.27% in May from a year earlier but inched up 0.17% from the preceding month, the Commerce Ministry reported Tuesday.

                May's headline CPI, which slipped for the fifth consecutive month, was weaker than the median 1.04% year-over-year contraction and the median 0.35% month-over-month increase forecast by economists polled by The Wall Street Journal.
                Somkiat Triratpan, director of the Commerce Ministry's Trade and Strategy Bureau, attributed the continued contraction in consumer prices to weaker retail oil prices, lower electricity charges for the May-August period and falling prices of some food items.
                During the first five months of this year, the country's headline inflation fell 0.77% from a year earlier.
                Meanwhile, core inflation, which excludes volatile oil and food prices, increased 0.94% in May from a year earlier and 0.05% from a month earlier, lower than the forecast median 1.0% year-over-year increase and 0.105% month-over-month rise.
                From January to May, core inflation rose 1.27% from a year earlier.

                Comment

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