Thailand’s headline consumer price index fell for a sixth consecutive month in September, declining by 0.72% year-on-year, but the country has yet to encounter a recession, says the Commerce Ministry.
The index stood at 100.11 last month, compared with 100.14 in August.
The main contributing factor was the decrease in energy prices, including electricity and fuel, driven by the government’s cost of living relief measures as well as falling energy prices in the global market.
The prices of fresh food items, especially chicken eggs, fresh vegetables and fresh fruits, were still lower than those of last year. Other goods and services did not have a significant impact on the rate of inflation.
The government wants to ease the cost of living, so it has lowered the power tariff to 3.94 baht per kilowatt-hour for the September-December period, down from 3.98 baht, while farm produce prices remained cheap due to the high quantity of supplies in the market.
“Though headline inflation was in negative territory for six months, it does not signify we are entering a recession,” said Nantapong Chiralerspong, director-general of the Commerce Ministry’s Trade Policy and Strategy Office.
“This is because the core inflation continued to rise, supported by domestic demand as well as employment in the country which did not decrease.”
Core inflation, which does not include goods in the energy and fresh food categories, rose by 0.65% year-on-year in September.
From January to September, core inflation increased by 0.9%.
Mr Nantapong is aware GDP growth has so far been lower than projections for this year, but the economy has still managed to grow slightly.
“This is not a sign of recession. It is an economic slowdown,” he said.
However, authorities are not being complacent with regard to the current situation. They remain cautious and are closely monitoring changes in economic circumstances, he noted.
Mr Nantapong said the government’s “Khon La Khrueng Plus” co-payment scheme, scheduled to be launched by the end of October, may have a limited impact on inflation.
The scheme would only be able to help increase inflation slightly because it is a short-term measure, he said.
To increase inflation more significantly, the government should speed up budget spending in order to inject more money into the economy, Mr Nantapong.
He expects Thailand’s inflation in the final quarter of this year to get close to zero, attributed mainly to the lower Dubai crude oil reference price as Opec and its allies continue to increase oil production.
For the whole year, headline inflation should stand at 0%, down from an earlier projection of 0-1%.