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Headline Inflation in Thailand Hits 14 Year High

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Thailand's Retail Inflation Predicted to Surpass 13-Year High

In June, Thailand’s headline inflation surpassed forecasts to hit a near-14-year high, reinforcing expectations of an interest rate hike next month, and the Commerce Ministry warning that price pressures will persist into the third quarter.

As a result of higher energy prices and base effects, the consumer price index (CPI) rose 7.66% from a year ago.

A Reuters poll predicted a rise of 7.50%, while May’s rise was 7.10%.

In a news conference, Ronnarong Phoolpipat, director-general of the Trade Policy and Strategy Office, said the CPI will rise at a similar pace to the second quarter.

As a result of last year’s high comparative figures, consumer prices should fall sharply in the final quarter.

As the pace of inflation was difficult to predict due to a weak baht, the ministry maintained its forecast of 4.5% average headline inflation. The inflation rate in 2008 was 5.5%.

According to the Bank of Thailand, headline inflation for this year will be 6.2%, above its target range of 1% to 3%.

To contain rising inflation, the central bank is widely expected to raise its policy rate from a record low of 0.50% at its next meeting on Aug. 10.

According to the core CPI index, which excludes energy and fresh food prices, prices rose 2.51% over a year earlier, exceeding the forecast’s 2.37% rise.

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