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Thai inflation slows to 6.4 pct as oil prices fall: ministry

AFP - Monday, September 1

BANGKOK (AFP) - - Thailand's inflation rate in August fell back from a 10-year high to 6.4 percent mostly due to falling world oil prices, the commerce ministry said Monday.

Inflation dropped significantly from July, when it reached another decade peak of 9.2 percent amid high fuel and food prices.

"The drop is because of a sharp fall in oil prices, as well as a fall in utility prices such as water, power and public transport," said Siripol Yodmaungcharoen, permanent secretary of the commerce ministry.

He said the decrease in the domestic cost of living was due to a government package unveiled in July to help the poor, which included tax cuts, limited free bus and train travel and slashed utility prices for Thailand's worst-off.

Prices in the food sector rose 1.7 percent in August, while other sectors fell 6.2 percent. There was a 15.0 percent drop in local fuel prices, the ministry said.

The six-month anti-poverty package pushed water rates down 59.2 percent, while power costs fell 37.8 percent in August.

But the ministry revised up its 2008 inflation projection to 6.5-6.9 percent from 5.0-5.5 percent, after average inflation for the first eight months of the year rose to 6.7 percent.

Last month the Bangkok of Thailand said it expected inflation across the year to average 7.5 to 8.8 percent.

Rising inflation prompted the central bank last week to raise interest rates 25 basis points to 3.75 percent.

The commerce ministry said in a statement that it expected inflation in September to increase as public buses adjust their fares and expressway toll fees increase.

"All of these factors will make inflation in September increase 0.19 percent from August," said Siripol.

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