THAILAND’S inflation stayed below the central bank’s target for a fifth straight month, building pressure on the monetary authority to continue with rate cuts to boost price gains and the economy.
The consumer price index rose 0.83 per cent in October, missing analysts expectation for a 0.9 per cent gain, according to data released by the Commerce Ministry on Wednesday (Oct 6). The gauge has been below the lower end of Bank of Thailand’s (BOT) 1 to 3 per cent target band since May. The government has a 2 per cent goal for price gains.
Core inflation stood at 0.8 per cent, unchanged from September, while consumer prices eased 0.06 per cent month on month in October, the ministry said.
The subdued inflation reading piles pressure on BOT to extend its surprise rate cut last month while Prime Minister Paetongtarn Shinawatra’s administration seeks more steps to stimulate South-east Asia’s second-largest economy.
The government and BOT have been publicly sparring over monetary policy and inflation targets though there have been some moves to accommodate one another. Last week, the government agreed to BOT’s demand to retain inflation target at 1 to 3 per cent for another year on condition the central bank takes measures to spur price gains to a midpoint of 2 per cent.
Inflation has undershot the central bank’s target this year, averaging 0.26 per cent in the first 10 months though BOT expects it to return to the lower end of the band by the end of the year. The monetary policy committee has argued that the current low inflation readings do not indicate signs of deflation, as there was no broad-based and continuous decline in prices. It sees inflation picking pace to an average of 1.2 per cent next year.
Still, flashpoints remain between the BOT and the Finance Ministry, the latest being the impending appointment of a new central bank chairman. A selection panel this week delayed the decision due to mounting opposition to the government’s candidate, Kittiratt Na-Ranong, a vocal critic of the central bank and a former finance minister.
Thailand’s economy has lagged the pace of expansion of its neighbours – growing at an average of less than 2 per cent in the past decade – hobbled by the surge in household debt and a manufacturing sector hurting from cheap imports from China. The sluggish performance has prompted Paetongtarn to push for a bigger budget and a lower interest rate to revive growth and investment. BLOOMBERG
