Thailand's inflation rate may rise as world oil prices surge

Source: Xinhua| 2019-09-17 20:26:09|Editor: xuxin
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BANGKOK, Sept. 17 (Xinhua) -- A think tank affiliated with the Kasikorn Bank said on Tuesday that Thailand's inflation rate will increase 0.3 percent as a result of the surge in global oil prices following Saudi oil attacks.

The Kasikorn Research Center made an assessment on the impact to the Thai economy based on two scenarios.

First, if Saudi Arabia does not launch military retaliation, global crude oil prices will likely spike over the short term for only a few weeks.

Under the first scenario, global crude oil prices may gradually decline toward the level before the Saudi Arabia's oil refinery attacks and this may affect headline inflation from September to October 2019, the research center report said.

"As a result, headline inflation during the fourth quarter of this year may increase 0.05 percent over the current projection, bringing the average headline inflation rate for 2019 to 0.84 percent," the report said.

Secondly, if Saudi Arabia launches military retaliation against the attacker, global crude oil prices will likely stay at high levels until the end of 2019, it said.

"The steepened instability and a likelihood that global crude oil supply will decline may cause Brent crude oil price to move within a range of USD 70-80/barrel during the final three to four months of 2019 and this may have a greater effect on the Thai economy," quoted the assessment report.

Kasikorn Research Center also predicted that if the global crude oil prices climb to 70 to 80 U.S. dollars per barrel during the fourth quarter of this year, diesel fuel price in Thailand may lean towards 30 Thai baht per liter.

As a result, the report indicated that the average headline inflation rate projected for the fourth quarter of this year may double from 0.72 percent to 1.48 percent, bringing 2019 headline inflation to 1.08 percent or up 0.3 percent from initial projection.

Drone attacks on Saudi Arabia's two major oil refineries on Saturday has sparked fears among investors worldwide over oil supply disruption as Saudi Arabia is the world's largest oil producing country.