Thai December inflation eases as floods recede

Thailand’s inflation slowed in December as food prices stabilised after shooting up amid the kingdom’s worst flooding in decades, the Commerce Ministry said yesterday.
The consumer price index (CPI) rose 3.53 percent from a year earlier, against a 4.19 percent hike in November, data showed, as massive inundations that had swamped farmland and disrupted supply chains for months receded.
“The situation returned to normal after the country’s critical flood,” said Commerce Ministry official Yanyong Phuangrach. “The prices of food and beverage were reduced.”
Core inflation, which strips out volatile energy and food prices, rose 2.66 percent in December.
The monthly inflation rate eased more than economists had expected, according to Dow Jones Newswires.
The price easing may also give central bankers the scope to lower interest rates at a policy meeting later this month, said Pornthep Jubandhu, macroeconomic analysis manager at Siam Commercial Bank.
“However, the economy has proven to be quite resilient and I personally think that there is less need for another rate cut,” he added.
The Bank of Thailand reduced the official cost of borrowing by 0.25 percentage points to 3.25 percent in November – the first cut in two years as it slashed growth forecasts citing the devastating floods and global economic slowdown.
Inflation increased 3.81 percent in 2011, compared with a rise of 3.30 percent a year earlier.
The Commerce Ministry predicted inflation this year would be in the range of 3.3 to 3.8 percent.
“The risk factors that may affect our inflation are the unstable global economy, natural disasters and the uncertainty of interest rate[s],” said Yanyong.