Thailand Inflation Rises at Fastest Pace in 20 Months

Thailand's consumer prices rose at the fastest pace in 20 months in February as food and fuel costs climbed, making it more difficult for the central bank to cut interest rates to spur economic growth.
Consumer prices gained 5.4 percent last month from a year earlier, compared with 4.3 percent in January, Pairoa Sudsawarng, the Commerce Ministry's deputy permanent secretary, told a press briefing today. That's the fastest pace since June, 2006. The median of 13 economists' estimates in a Bloomberg News survey was 5.1 percent.
Bank of Thailand last week refrained from cutting its benchmark interest rate amid concern inflation will accelerate. The government, which took office last month, froze cooking gas prices among measures to keep a lid on inflation.
``The central bank wants to cut the rate, but they can't because of rising inflation,'' said Nuchjarin Panarode, an economist at Capital Nomura Securities Pcl in Bangkok. ``We think the earliest they can do it is early second quarter, when inflation is expected to ease off.''
Prices of instant noodles and cooking oil are rising in line with soaring commodities and production costs. Pork prices have climbed 39 percent this year as swine diarrhea killed more than 500,000 piglets.
Price Freezes
Producers of cooking palm oil plan to raise prices again by 9.5 percent, the Krungthep Turakij newspaper reported Feb. 29, citing an unidentified official from the Palm Oil Producers Association. The ministry last month approved an increase in the price of cooking oil made from palm oil and soybean by as much as 13 percent.
``We maintain our 3.5 percent inflation forecast for this year as we want to see how effective government measures to curb inflation will be,'' Pairoa said.
The Energy Ministry froze the cost of liquefied petroleum gas until July to help curb inflation. State-controlled PTT Pcl, the country's largest energy company, may have to absorb a loss of 450 million baht ($14 million) a month because of the plan, Energy Minister Poonpirom Liptapanlop said Feb. 26.
Gains in the nation's currency to the highest level since August 1997 have helped contain price increases by curbing the cost of oil, almost all of which is imported.
Bank of Thailand policy makers next meet on April 9 to decide on the interest rate, which they cut five times until July last year.