CONSUMER prices fell for a 15th straight month in March, but officials predict a reversal this month with more expensive farm items and oil.
The Commerce Ministry said on Friday that consumer prices, based on 450 products and services, fell by 0.46 percent year-on-year in March, easing slightly from a 0.50- percent drop in February and 0.53 percent in January.
The decline was mainly because of lower costs for power bills and cooking gas.
On a monthly basis, however, prices edged up 0.21 percent from February, after the previous month’s 0.15-percent rise, which had been the first increase since last November.
The month-on-month higher prices were largely attributed to a rise in cigarette prices spurred by a new excise tax.
The Cabinet agreed to the cigarette excise tax on February 9. The higher tax will add an estimated 12 billion baht in revenue this fiscal year and 15 billion baht annually in subsequent years.
Core inflation, which excludes food and energy prices, was 0.75 percent on an annual basis in March and 0.01 percent on a monthly basis.
In the first three months of the year, consumer prices fell by 0.50 percent from the same period a year earlier. Core inflation was 0.67 percent for the three months.
Somkiat Triratpan, director of the Commerce Ministry’s Office of Trade Policy and Strategy, said the headline inflation rate, measured by consumer prices, is moving upward, and is expected to become positive from April onward, with oil and farm-product prices the key drivers.
The ministry has forecast 2016 inflation in a range of zero to 1 percent based on expected economic growth of 2.8 percent to 3.8 percent, assuming Dubai crude oil prices of $30 to $40 per barrel and foreign exchange of 36 to 38 baht to the US dollar. Commerce officials are scheduled to review their inflation policy in May.
“We expect the government’s stimulus measures, including a tax deduction of up to 15,000 baht for dining expenses, may affect inflation,” he said. “But the extent of the impact will depend on people’s spending during that period.”
The tax measure is meant to entice people to spend money locally during the long public holiday, instead of traveling abroad. It also aims to spark consumer spending during the Thai new year amid a languid economic recovery.
Individual taxpayers who dine at restaurants that issue tax invoices from April 9 to 17 will be entitled to a 15,000-baht deduction from taxable income.
Thanavath Phonvichai, vice president for research at the University of the Thai Chamber of Commerce, said that as core inflation edges up, the rate of increase remains relatively low, reflecting a Thai economy with signs of only a mild recovery.
“Core inflation in the first quarter was 0.67 percent, compared with 1.1 percent in the first quarter of 2015, clearly demonstrating the economic recovery remains fragile and the government’s economic stimulus measures have yet to fully drive the economy,” Thanavath said.
He urged the government to come up with fiscal measures in the second quarter to speed up spending on infrastructure-development projects and tackle the impact of drought conditions.