Friday, August 01, 2008

Thai Inflation Accelerates in July 2008

Thailand's inflation accelerated to the fastest pace in a decade in July, suggesting the central bank may increase borrowing costs further to tame prices even as economic growth cools. Consumer prices gained 9.2 percent from a year earlier, the Commerce Ministry said today in Bangkok. The rate was the highest since July 1998. This was up from 8.9 percent in June.

Surging oil and food costs may prompt Thailand's central bank to raise its benchmark interest rate for the second time in as many months when policy makers next meet on Aug. 27. Growth in Southeast Asia's second-largest economy is slowing amid legal challenges to the government that are sapping confidence.

Core inflation, which excludes fresh food and fuel prices, accelerated to 3.7 percent in July, the Commerce Ministry said today. The pace, which exceeded for a second month the 3.5 percent ceiling used by central bank policy makers to help set monetary policy, compares with the 4 percent expected by economists.

The Bank of Thailand on July 16 raised its one-day bond repurchase rate by a quarter percentage point to 3.50 percent, the first increase in two years, saying it may raise it further to cool inflation.

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