Inflation has risen. How does this impact over 70 million Thais?

Recently, prices have been continuously rising, causing our money to gradually lose its value. This phenomenon is called “inflation,” an economic occurrence that affects everyone—from housewives, students, and vendors to large corporations, which are no exception.

What are the true causes of current inflation?

Inflation is an economic condition where the prices of goods and services increase steadily. Simply put, it means things become more expensive, wages stay the same, but purchasing power decreases.

Today, inflation is caused by multiple factors combined:

High demand for goods, supply cannot keep up
After the global economy gradually recovers from the pandemic, consumers rush to buy goods and services to compensate while maintaining stability. However, factories are unable to keep pace, and transportation remains disrupted due to shortages of containers and semiconductor chips.

Energy prices skyrocket
The prices of crude oil, natural gas, and coal have risen sharply due to production disruptions during the pandemic. As the world reopens, demand surges, causing energy prices to soar. For example, crude oil prices fell to their lowest in 2020 but then hit record highs as countries reopened.

Loose monetary policies
Many central banks, including the United States, have released large amounts of money to support the economy, increasing the money supply in the system. People have more money to spend, leading to higher demand.

Who benefits, and who suffers from inflation?

Advantage groups

Merchants, entrepreneurs, shareholders
They can raise prices in line with inflation or even more, increasing profits. For example, PTT in the first half of 2022 had revenue of 1,685,419 million baht and net profit of 64,419 million baht, growing by 12.7% compared to the previous year.

Bankers
Interest rates rise, allowing banks to earn more from lending.

Debtors
If the debt has fixed interest rates, higher inflation makes it easier for debtors to repay.

Disadvantaged groups

Employees with fixed salaries
Wages may increase, but not enough to keep pace. This month’s expenses and next month’s purchases of many items decrease in value.

People with fixed income
Such as the elderly who save money; low interest rates mean their savings lose value over time.

Lenders (Lenders)
Because the amount they get back loses value due to inflation.

How is deflation different from inflation?

Deflation is the opposite of inflation. It is a situation where prices of goods and services decrease continuously, caused by reduced demand or insufficient money circulation in the system.

Both can be dangerous if severe and prolonged, harming the economy and people’s livelihoods equally.

What are the real impacts of inflation?

Effects on everyday life

Reduced purchasing power
A young mother earning 20,000 baht now spends it all on food, rent, water, and electricity. Last year, 20,000 baht per month left some savings; now, she’s barely able to cover expenses.

Prices of essential goods
Look at the prices over the past few years:

Effects on entrepreneurs

Declining sales, rising costs
When prices go up, customers buy less, but production costs increase. Some entrepreneurs may delay expansion, reduce hiring, or even close their shops.

Effects on the stock market and global economy

According to the IMF January 2567 report, the global economy is expected to grow 3.1% in 2567 and 3.2% in 2568, but still below the historical average due to:

• Tight monetary policies (Central banks raising interest rates to curb inflation)
• Reduced financial support
• Low productivity growth

Thailand, in January 2567, had an overall CPI (Year-on-Year) at 1.11%, down from the previous year. This is the lowest in 35 months.

What should we do when inflation arrives?

Adjust investment plans

In an inflationary environment, deposit interest rates are very low. Saving money in a savings account is not worthwhile. Consider investing in assets with higher returns, such as:

Stocks and mutual funds
During inflation, bank stocks profit more (due to higher interest rates). Insurance stocks perform well, and food sector stocks have bargaining power.

Gold
Moves in the same direction as inflation. The higher the inflation, the higher gold prices. It’s a good hedge to prevent your savings from losing value.

Real estate
Rental income adjusts with inflation and is less volatile than the stock market.

Floating Rate or Inflation-Linked Bonds
Interest rates adjust according to inflation changes.

Check financial readiness

• Reduce unnecessary debt
• Plan expenses carefully
• Buy what you need, not just what you want

Follow economic news

Inflation and its effects on us change constantly. Keep track of CPI data, central bank news, and government policies to adapt promptly.

What does Thailand’s inflation history tell us?

Thailand has experienced severe inflation before. In 2517, it exceeded 24.3% due to the Israel-Arab war causing oil prices to surge. In 2541, after the 1997 crisis, it exceeded 7.89% as the baht depreciated. Recently, in May 2565, it surpassed 7.10% due to the Russia-Ukraine war.

Historically, any issue related to inflation stems from a combination of global problems.

Key points to remember

Moderate inflation (around 2-3% per year) is normal and beneficial for the economy. It encourages business expansion, employment, and money circulation.

However, if inflation becomes too high (“Hyper Inflation”), it becomes dangerous for industries, causes unemployment, and makes life difficult for people.

For investors, understanding that inflation benefits certain products, businesses, and stocks can help plan more profitable investments and protect assets from losing value.

Creating opportunities from adversity is the key to navigating this inflationary period.