(Bloomberg) – Thailand’s retail price inflation accelerated in May to its highest level in nearly 14 years, a level that could test the central bank’s resolve to stick to costs of borrowing.
Consumer prices rose 7.1% from a year earlier, compared with 4.7% a month ago, official data showed on Monday. That’s faster than the 5.9% median gain predicted by economists in a Bloomberg survey and the biggest since July 2008.
The increase in the inflation rate was mainly due to energy and food products, a development predicted by the Governor of the Bank of Thailand, Sethaput Suthiwartnarueput. Yet inflation at more than double the central bank’s 1% to 3% target days before the monetary policy review will make it difficult for policymakers to ignore the impression, given that the outlook is clouded by war-induced supply grunts in Russia.
Inflation could pick up in June as continued rise in fuel prices has increased transport and logistics costs and weak baht has pushed up the price of raw materials and imported goods, the director said General of the Office of Trade Policy and Strategy, Ronnarong Phoolpipat.
So far, fiscal policy has led efforts to control prices. The government of Prime Minister Prayuth Chan-Ocha has cut subsidies for diesel, the main fuel used in transport.
“There remains immense pressure on inflation as fuel and energy costs continue to climb,” Ronnarong said. “We just want OPEC’s oil production boost to start pushing crude prices down.”
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