An economic index that measures headline inflation recorded another month of decline, marking the 12th month that the index had fallen since the pandemic had begun in March of last year.
Compared to February 2020, the consumer price index had fallen 1.17% last month. The CPI also fell in January and February by 0.75%, while inflation had risen by 0.12%.
The Trade Policy and Strategy Office explained the CPI had declined in February because of measures passed by the government that aimed to lower consumer spending on utility bills, particularly water and electricity.
These measures came into effect last month and will continue to be effective until this month.
TPSO director-general Phusit Ratanakul Sereroengrit said that this coupled with the drop in prices of raw food like rice and fresh vegetables. This is due to the higher supply and low prices in the market as compared to the same period last year.
The same phenomenon has been observed in other commodities, except for fuel. Mr. Phusit said that oil prices have started to rise last month because of a similar increase in prices in the global market. He also added that this is the first time oil prices have experienced a hike in the past 13 months.
Core inflation also rose year-on-year by 0.04%.
However, Mr. Phusit said that the rise in inflation for February is not something to worry about as it is a direct effect of government subsidies and stimulus packages. He added that consumer prices actually rose by 0.12% in February if the subsidies and government measures are not taken into account.
The TPSO director-general speculated that they might see a slight increase in the DPI as well for March, as the government measures continue to remain in effect until the end of the month.
When the government measures have expired, the economy can start seeing a gradual rise in consumer prices moving forward from April.
“[This is all] thanks to an economic recovery and increasing purchasing power,” he said.
As for other indicators, Mr. Phusit says that they are expecting an annual headline inflation of between 0.7% and 1.7% for the entire year. He said that this rise in inflation is in support of the economic growth that they are expecting this year as a result of vaccinations and easing of existing restrictions.
While the TPSO is optimistic about the inflation rates, the President of the University of the Thai Chamber of Commerce is less confident.
According to President Thanavath Phonvichai, the decrease in consumer prices is not a sign of economic recovery. He said that they have only been made possible because of the government’s measures meant to aid citizens financially against the effects of the pandemic.
He said that this is another sign that the economy is yet to recover from the pandemic.
“Purchasing power remains relatively weak,” he said.
Mr. Thanavath urged the government to continue rolling aid measures to cushion the economy, and to keep the interest rates low until sufficient recovery has been observed.