Annual inflation hit a 16-month high of 4.1% in January on rising food, farm and fuel prices. But the sharp rise was in part due to last year’s low base, when prices fell due to the global recession.

The country’s annual consumer price index, which tracks 417 products and services, rose for the fourth consecutive month after climbing by 3.5% year-on-year rise in December.

Monthly inflation returned to positive numbers of 0.6% in January, after dipping to -0.1% in December from 0.3% in November.

dollar growth
Thailand’s inflation accelerated to a 16-month high in January

“The further increase in consumer prices reflects clearer signs of the country’s economic recovery and a rebound in consumer spending, due to export recovery which leads an increase in industrial manufacturing, employment and rising farm prices on the back of high global demand,” said Yanyong Phuangrach, permanent secretary for commerce.

Food and beverage prices rose by 3.2% year-on-year, largely due to increases in the cost of rice, flour and cereal products, meats, vegetables and fruits.

Inflation may accelerate to as much as 5 percent this year on rising oil prices and as the $261 billion economy recovers from its recession, the central bank predicts. The expiration of the government’s subsidy program for low-income earners will also lead to higher prices.

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