Ministry downgrades inflation forecast
The Commerce Ministry downgraded its annual headline inflation forecast yesterday to a range of -0.7% to -1.5%, with an average of -1.1%, from a range of -0.2% to -1.0%, an average of -0.6%, after the rate dropped for the fourth month in a row in June.
The forecast assumes GDP will contract by 7.6%-8.6% this year, with Dubai crude oil prices averaging US$35-45 a barrel and an exchange rate of 30.5032.50 baht per US dollar.
“The pandemic has impacted the world’s overall economy and tourism,” said Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office. “Although the inflation rate may edge up in the second half of the year, the full-year rate will remain depressed due to the impact of Covid19 reducing economic activities such as tourism and consumer consumption, purchasing power and oil prices.”
Ms Pimchanok voiced optimism that the 400-billion-baht budget earmarked for economic and social rehabilitation under the government’s 1.9 trillion baht in coronavirus relief measures and spending of the 2020-21 fiscal budget would boost the economy in the remaining months of the year.
The office said yesterday that the consumer price index, a gauge of headline inflation, fell 1.57% year-on-year in June after a 3.44% dip in May, the biggest decline in nearly 11 years.
This was the fourth straight month of decline after prices fell 2.99% in April and 0.54% in March, which was the first contraction in 33 months.
The major contributions were from the end of a government utilities subsidy to ease the impact of the coronavirus crisis and lower energy and fresh food prices.
Other prices were quite stable and moved in line with the current situation and consumer behaviour, Ms Pimchanok said.
Core inflation was -0.05% in June. For the first half of the year, headline inflation was -1.13% and core inflation was 0.32%.
Ms Pimchanok said social and economic activities, particularly in the service sector, have rebounded after the easing of the lockdown in Thailand and other countries. The figures were underscored by the rising trends of other economic indices, indicating that the economic situation and inflation are gradually nearing normal.