Thailand will not adjust a raft of populist policies, including minimum wage increases and a new rice price scheme, despite fears they could fuel inflation following devastating floods, a minister said. The economy is expected to take a major hit as a result of the worst floods in half a century, with the growth forecast for 2011 recently revised down to 1.5 percent, from 3.5 percent to 4.0 percent.
“This will not derail us from the aim of re-balancing the economy,” deputy prime minister and commerce minister Kittiratt Na-Ranong said in Bangkok late on Thursday. Inflation edged up in October as widespread damage to farmland forced food prices higher. The consumer price index rose 4.19 percent in the month from a year earlier, against a 4.03 percent rise in September.
In addition, Thailand the world’s biggest rice exporter introduced a scheme last month to lift by 50 percent the price that rice farmers receive from the government for the staple grain. The move, part of an array of promises that helped propel former prime minister Thaksin Shinawatra’s allies to victory in a July election, has fueled speculation that world prices could be set to surge. Kittiratt dismissed concerns that the kingdom could hurt itself with the policy, which would make exports less competitive, saying that the global price of rice was too low and should increase. “Plain rice has good reason to be more expensive than it is,” he said. “Why is plain rice now only a third of the cost of a bottle of water?” The government is boosting the minimum price farmers receive by buying unmilled rice directly at 15,000 baht ($485) per ton. The previous price was about 10,000 baht.
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