Thai inflation rate edges higher in May

June 7, 2007 - 0:0
BANGKOK (AFP) -- Thailand's inflation rate edged higher in May to 1.9 percent due to a spike in food prices and high energy costs, marking the first increase this year, the Commerce Ministry said.

Year-on-year inflation edged up from 1.8 percent as vegetable and fruit prices jumped 13.1 percent and rice and cereal product prices rose 9.2 percent in May, the ministry said. Energy costs were up 1.1 percent.

"Given rising oil prices, inflation is likely to start rising again in the fourth quarter," Karun Kittisataporn, the ministry's permanent secretary, told reporters.

But Karun said the ministry would maintain its inflation estimate at 1.5-2.5 percent for this year.

May inflation rose 0.8 percent compared with April while core inflation, excluding volatile food and energy prices, increased 0.7 percent year-on-year, it said.

The Bank of Thailand last week cut its key interest rate by a half-point to 3.5 percent, the fourth rate cut this year, in a bid to spur sluggish consumer spending which has been hit by post-coup political worries.

With global oil prices nearing 65 dollars per barrel, analysts said the central bank might halt rate cuts in the coming quarters.

"If rising fuel prices start to pressure the economy again, the interest rate could be kept unchanged for the rest of the year," said Thanomsri Fongarunrung, a senior economist at Phatra Securities.