Thai inflation surges above 4.0%

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Thai inflation surges above 4.0%
- AFP News 2011-05-03

BANGKOK, May 2, 2011 (AFP) - Thai inflation soared above 4.0 percent in April, government data showed Monday, reinforcing expectations of more interest rate rises by the central bank to prevent the economy overheating.

The consumer price index increased 4.04 percent from a year earlier, compared with a 3.14 percent rise in March, the commerce ministry said. Month-on-month prices rose 1.38 percent as food costs increased.

Annual core inflation, which excludes volatile energy and food prices, picked up to 2.07 percent in April, although it remained within the central Bank of Thailand's target range of 0.5-3.0 percent.

The central Bank of Thailand (BoT) has raised the official cost of borrowing six times since July 2010, by a total of 1.5 percentage points to 2.75 percent, and analysts expect further tightening in an attempt to control inflation.

It said last month as it announced its latest rate increase that it was ready to take further action if needed, and its monetary policymakers are scheduled to meet again on June 1.

"The BoT will definitely keep hiking its rate," Siam Commercial Bank analyst Pornthep Jubandhu told Dow Jones Newswires.

The Thai economy returned to growth in the fourth quarter of 2010 on the back of solid exports and private consumption, snapping out of a brief technical recession.

But the rising cost of living could prove a headache for Prime Minister Abhisit Vejjajiva and his ruling coalition as they gear up for what is expected to be a tough election battle in the coming weeks.