BANGKOK – The consumer confidence index of the University of the Thai Chamber of Commerce fell to 79.1 last month from 80.4 in January and December’s 81.1, an 18-month high.
The February reading is the lowest since July’s 78.2.
While a reduction in retail oil prices from last year has given consumers more to spend, falling prices for rubber and rice have hurt demand in the provinces.
“Consumers thought the economy had not recovered much,” the University reported. “Although the political situation was more stable, worries about high living costs and future income continued to dent consumer confidence.”
Thanavath Phonvichai, an economics professor at the university, said confidence could fall further as gasoline prices increased recently and commodity prices keep declining. “But spending may improve in May or June as the government accelerates its spending,” he said.
A coup in May ended months of political tension, but the military-led government has still struggled to get Southeast Asia’s second-biggest economy on track as exports have stayed weak and domestic consumption sluggish.
The economy grew only 0.7 per cent last year, the weakest since devastating flooding in 2011. The junta aims for 4 per cent growth this year.
Private consumption, a big part of the economy, has been curbed by high household debt, one reason the Bank of Thailand (BOT) has held its policy interest rate at 2 per cent for a year.
Most analysts expect no change when it reviews policy on March 11. A deputy BOT governor said last month the benchmark rate was already low and any rate cut might not boost loan demand much.
Thailand’s consumer price index fell 0.52 per cent in February from a year earlier. In January, it declined 0.41 per cent, the first fall since 2009.
Nittaya Suwannarat, an employee with a processed food firm in southern Thailand, said the economy isn’t good in her area, where many people are rubber growers. “Low-income people spend a lot less or go for cheap food,”the Songkhla resident said. “What people buy is anything cheap.” The university’s confidence index began declining months before Thailand began to face political turmoil in late 2013. Through April 2014, it fell 13 consecutive months.