Thai July inflation flat; interest rates still going up

BANGKOK: Inflation in Thailand was flat in July, confounding forecasts of a rise, but economists said the central bank would probably still push interest rates higher this month as core inflation remained near the upper end of its target range.

A new government is about to take power and it has promised a big increase in the minimum wage plus measures to support rural consumption and huge infrastructure spending.

Economists expect the Bank of Thailand to raise its benchmark rate by another 25 basis points to 3.50 percent at its meeting on Aug. 24 to tame price pressures.

The central bank aims to hold core inflation, which excludes fresh food and energy prices, in a range of 0.5 to 3.0 percent. The annual rate was 2.59 percent in July.

Copyright Reuters, 2011