January inflation remained relatively low with Headline and Core Inflation growing 1.93 percent YoY and 1.04 percent YoY, respectively. Meanwhile, the Consumer Price Index (CPI) increased 0.42 percent MoM, led by meat, poultry and fish prices (up 1.48 percent MoM due to the Chinese New Year), fuel costs (up 1.48 percent MoM on rising global energy prices and the depreciating Baht), as well as electricity that was up 1.45 percent MoM with the electric power “Ft” surcharge hike.
Since the ongoing political turmoil here may continue for several months, this will weigh on consumer spending, thus inhibiting businesses from transferring costs to end products. Given this, we at KResearch expect that 1Q14 inflation will lean toward 2.0 percent YoY and 2014 inflation at around 2.2-2.6 percent YoY.
Although such inflation rates should not hinder Bank of Thailand toward implementing monetary policy to support economic growth, they may steepen the cost of living, thus hurting consumers whose incomes vary with the economic performance.
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