The ministry reported yesterday that the Consumer Price Index continued weakening last month by 0.53 per cent year on year. Month-on-month inflation was minus-0.26 per cent, as the CPI has dipped for a 13th month because of the low oil price.

“Inflation looks like remaining negative in the first quarter of this year, but it could possibly turn to positive growth depending on the oil-price movements. If oil rises above $30 per barrel in the second quarter or in the second half of the year, inflation could regain positive figures. The factors that require close monitoring include Iran beginning to export oil again and the impact of drought,” Somkiat Triratpan, inspector-general at the ministry and director of its Policies and Trade Strategies Bureau, said yesterday.

He insisted that although inflation continued to be negative, Thailand was not facing a deflationary period as spending power has increased slightly despite lower crop prices.

However, if the oil price continues to decrease, inflation will still be in negative territory for the remainder of this year, he said.

Oil averaged $28 per barrel in January.

Fuel costs down

Last month, the CPI continued to decrease as domestic fuel prices were 15.3 per cent lower year-on-year, along with decreased prices of transport, cooking gas and some foods. Prices of some fresh foods, poultry, dining out, rental fees, and alcohol and tobacco increased last month.

The ministry expects that inflation for the whole year will range between 1 and 2 per cent. This is based on an assumption that gross domestic product will grow by 3-4 per cent, the baht will range between 36 and 38 against the US dollar, and the price of Dubai oil will be $48-$54 per barrel.

Last month, core inflation – excluding volatile fuel and food prices – was slightly positive, at 0.59 per cent year on year and 0.07 per cent month on month.