BoT demonstrates economic gains despite inflation spike

Private consumption, investment rising

Thailand’s economy has continued to rebound, reflected by better signals in the May economic data, despite a sharp spike in the inflation rate, according to the Bank of Thailand.

The economy in May improved from the previous month, with indicators of private consumption and private investment increasing in line with an uptick in economic activities.

External demand also performed well, attributed to the export and tourism sectors, central bank senior director Chayawadee Chai-Anant said yesterday.

Private consumption in May after seasonal adjustment rose by 0.6% from the previous month in most spending categories.

This improvement reflected waning concerns over the Omicron outbreak, which led to positive development in various economic activities, said the bank.

Yet consumer confidence continued to decline, a sign of concerns over rising living costs.

Ms Chayawadee said headline inflation accelerated mainly from energy inflation as a result of higher electricity and domestic retail oil prices.

Core inflation also increased because of higher food prices and the low base effect for water bills last year.

The headline inflation rate jumped to 7.1% in May from 4.65% in April.

The central bank is maintaining its assessment of inflation peaking in the third quarter, mainly because of higher energy and food prices, she said.

Ms Chayawadee said the number of foreign tourist arrivals after seasonal adjustment continued to increase to 521,400 in May from 293,400 in April. For the first five months this year, the number of foreign travellers was 1.31 million.

The volume of tourists from Asean and India increased as travel restrictions were relaxed in both Thailand and abroad.

In addition, the service production index excluding gold in May grew by 2.5% on a month-on-month basis, rising strongly by 20.9% year-on-year.

Domestic tourism set a positive trend, reflecting both higher hotel occupation rates and transport usage, according to the bank.

The value of merchandise exports excluding gold after seasonal adjustment increased 3.5% from the previous month in most categories, in line with higher demand from trading partners.

Private investment indicators after seasonal adjustment improved from the previous month following an increase in imports of capital and higher registration of commercial vehicles, in line with higher demand, said the bank.

“The Thai economy continues to pick up in June, with a backdrop of healthy economic activities despite inflationary pressure,” Ms Chayawadee said.