BoT: Oil price hike to drive inflation up

The Bank of Thailand (BoT) has expressed its concern that the national inflation rate may go up further if the global oil price still increases continuously while the government eventually decides to stop subsidizing the domestic diesel price.

BoT Governor Dr Prasarn Trairatvorakul stated that the government might give up its diesel subsidy scheme, which had been used to pin the domestic diesel price below 30 baht per liter, as the global oil price had been rising continuously.

Dr Prasarn pointed out that the issue could cause higher inflation rate to stand at 2.5-4.5% while the core inflation rate was anticipated to be at 2-3%, according to the latest assessment.

Nevertheless, the BOT Governor continued that if the diesel subsidy scheme was maintained, the core inflation rate would likely be reduced by 0.5% from the aforementioned figure while the inflation rate might decline by 0.5-1%. He reasoned that people’s living cost would not get affected from the oil price hike.

Earlier, the BoT forecast that the inflation rate would rocket to 3% within the last quarter of 2011 while the core inflation rate would surpass the target of 0.5-3%.


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