The rise in the Consumer Price Index (CPI) in the first quarter of this year was mainly due to the increase in production costs while the purchasing power of consumers was still depressed, according to the Internal Trade Department.

The CPI for January to March posted an increase of 1.4% on the same period last year. The rise was due to a 2.4% lift in the non-food sector index while the food sector had a decline of 0.4%, said Phisit Settawong, the department's director-general.

The transport and telecommunication index in the non-food sector, which accounts for 17.45% of the overall basis for calculating price increases, rose by 6% in the first three months because of oil costs.

Mr Phisit said the decline of food prices in the first quarter reflected the fact that farmers were suffering from sluggish prices for their produce, which had reduced their purchasing power.

The prices of many food items dropped in the first quarter, except rice and rice-based products which rose 2.2% and ready-to-eat food, up by 0.2%.

Mr Phisit said he was concerned that the monthly index in March remained unchanged from February and that this development would send a negative signal to the government.

"If the monthly index still has no movement in the next few months, it could indicate that local consumption still needs stimulus measures."

Mr Phisit said that the prices of many agricultural products had plunged this year, especially rice, maize, palm, tapioca and coconuts. The government still needed to implement price intervention schemes. The core index, excluding oil and food, rose 1% in the first quarter, year-on-year.

By: Woranuj Maneerungsee

Source: Bangkok Post