BOT CONSIDERS FUEL LEVY INFLATION IMPACT

Bangkok Post - 17 January 2012

The central bank will resume assessing the impact higher levies on petrol and diesel will have on inflation before moving ahead with any plans for the policy rate, says governor Prasarn Trairatvorakul.

Dr Prasarn said yesterday the reinstated levies would affect inflation and the Bank of Thailand must evaluate how much before submitting an interest rate plan.

He added escalating tension between Iran and Western nations may lead oil prices to become more volatile.

Yesterday the government reinstated its retail levy provided to the state Oil Fund, which is 14.55 billion baht in the red.

Contributions will resume at low rates: one baht per litre for premium and regular petrol, 60 satang for diesel, one baht for ethanol-based gasohol 91 and 95, and 10 satang for E85.

Last September the same government cut the levy collection by 8.02 baht per litre for premium petrol, 7.17 baht for regular petrol and three baht for diesel, resulting in proportional price decreases for the three kinds of fuel.

He expects the country's inflationary pressure to ease given a weaker world economy and lower energy and fresh food prices after the floods receded.