25/07/2011 (The Nation) - The Pheu Thai-led government intends to continue to control the prices of goods in a bid to restrain expected high inflation after the launch of its promised policies, particularly the minimum wage rise and rice pledging scheme.

In response, the Commerce Ministry has already proposed a price structure for 10 essential foods and consumer goods to facilitate price control management and tackle the rising cost of living.

The 10 products are pork, chicken, beef, shrimp, egg, cooking palm oil, sugar, packed rice, fast food, fruits and vegetables.

Thailand is bracing for higher inflation next year, with the consumer price index (CPI) expected to rise by 3.2-3.7 per cent this year due mainly to higher labour costs and raw materials prices.

Inflation in the first half of the year grew to 3.56 per cent. Late last week, the Bank of Thailand forecast the country's headline inflation at 3.9 per cent this year and 3.2 per cent next year.

Yanyong Phuangrach, permanent secretary at the Commerce Ministry, said the list of products and suggestions for price control measures had recently been sent to the Pheu Thai economic team.

The ministry's suggestions focus on price control management and the launch of stringent measures that need a government mandate.

The prices of pork, beef, chicken, eggs and shrimp can be brought down if the government considers reducing import tariffs on raw materials such as soybean meal and fish meal. The two raw materials are key costs for the livestock business.

With cooking palm oil and sugar, the government should focus on balancing the benefits of farmers and manufacturers. In particular, the government should negotiate with modern trade operators to reduce entrance fees.

The Internal Trade Department has scheduled a discussion with manufacturers of consumer products and those in labour-intensive industries to sound out their reaction to the new government's move for a daily minimum wage of Bt300.

Products that will face higher costs of production are mainly student uniforms, electric appliances, printing products, plastic bags and plastic products, food and beverages, helmets, construction materials and agricultural appliances.

A senior official said that increasing crop prices, and the wage rises, which are expected to be effective next year, would certainly increase the production costs of consumer products.

The Commerce Ministry has frozen the prices of several products, but this will end in September. Prices are expected to rise after being controlled for more than a year.

However, the department must wait for the new government's policy on how to manage goods prices, the source said.

It will also need to consider manufacturers' requests for price hikes in detail, as the wage rise policy will be a major factor pushing up production costs.

The non-food and beverage sector accounts for 60.99 per cent of the inflation calculation, while food and beverage products, mainly meat, fruits and vegetables and seasoning, are weighted at 39.01 per cent of the inflation basket.