Inflation peaked at 6 per cent last month, the highest level in five months, due mainly to dramatic increases in fuel and food prices, the Commerce Ministry said yesterday.

Although fuel costs will continue to increase gradually along with rising world prices, inflation should be in retreat for the rest of the year, the ministry said.

In October last year, the inflation rate was 6.2 per cent.

Karun Kittisataporn, Commerce Ministry permanent secretary, said April's high headline inflation rate did not surprise him because of the rise in the oil price.

"However, the high rate reflected the floating of the oil price in July last year - stringent controls on prices of goods will help keep inflation for the remaining months of the year below 6 per cent, Karun said.

The rising price of fuel is the only major factor that concerns the ministry as far as inflation is concerned, the permanent secretary said.

As long as the average oil price stays at US$60-$65 (Bt2,250-Bt2,450) per barrel, the ministry will stand by its estimate that headline inflation will not exceed 4.5 per cent for the whole year, Karun said. Inflation is predicted to be 5.8 per cent in the second quarter of this year, he said.

Along with higher fuel prices, higher public transportation and electricity fees contributed to last month's rise in inflation, as did higher prices for agricultural products, sugar and retail food items.

In the food and beverage sector, prices increased by 2 per cent in April from March due to droughts in some areas and higher logistics costs, but prices of some products - such as pork, chicken and eggs - decreased.

Prices in the non-food and beverage sector saw a 0.7-per-cent increase, largely because of the fuel price hike.

Core inflation in April increased by 2.9 per cent from the same period last year.

Core inflation is a measure that excludes certain items whose prices are considered volatile, such as energy and food products.

In an effort to reduce the burden on consumers, Karun said, the ministry would closely monitor prices and would not allow the price of any item to rise too fast.

The ministry has already refused to allow increases in the retail prices of nine goods because their manufacturing costs are not that high, he said.

Those products are chemical fertiliser, medicine, coffee, baby powder, yoghurt, yoghurt milk, noodles, school shoes and milk.

Petchanet Pratruangkrai

The Nation