Thai consumer confidence falls on inflation concern (Update1)
17-MAY-2008 Intellasia | Bloomberg
May 17, 2008 - 7:00:00 AM
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Thailand's consumer confidence fell for the first time in six months in April as surging food and oil prices fanned the fastest inflation in two-years.
The index declined to 73 last month from 73.8 in March, the University of the Thai Chamber of Commerce said in Bangkok today. The gauge tracks a nationwide survey of 2,242 respondents.
``Higher oil and food prices boosted the cost of living and hurt consumers,'' said Thanavath Phonvichai, an economist at the university. ``Confidence may fall further as oil prices keep rising.''
The risk of inflation accelerating is high and Thailand's central bank will focus on combating it as the economy is still growing, Governor Tarisa Watanagase said April 29. Rising prices may prompt to the Bank of Thailand and other regional central banks to raise interest rates.
``Inflation is going up, and in most Asian countries interest rates are too low,'' Michael Ivanovitch, president of MSI Global Inc. in New York, said on Bloomberg Television. ``Interest rates definitely have to go up in Thailand.''
The price of diesel, used in transportation and manufacturing, rose 3.2% in April. It's added 7% this year, according to the Energy Ministry's Web site. The price of 5% white rice, a Thai staple, has doubled in the past year, according to the Commerce Ministry's Web site.
A military coup in September 2006 caused consumer confidence to fall for 12 consecutive months until last October, when it slumped to the lowest level since January 2002.
Thailand's first elected government took office in February and is spending more, cutting taxes and giving funds to villages as it tries to spur economic growth to 6% this year from 4.8% in 2007.
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