Inflation fears as minimum-wage hikes approved

The highest rate will be only Bt221 per day because of some limitations, said deputy government spokesman Watchara Kannikar.

After the increases, workers in Phayao will see the lowest wage of Bt159 while workers in Phuket will enjoy the highest rate of Bt221. Next year, civil servants' pay will also be raised, together with a hike in MPs' pay. With prices of agricultural crops and energy expected to rise, this could increase inflationary pressure next year.

Before the Cabinet decision to approve the wage hikes, the Bank of Thailand said core inflation could breach its target range of 0.5-3 per cent next year, which prompted it to raise the policy interest rate on December 1.

The Internal Trade Department has scheduled a discussion with manufacturers of consumer products and those in labour-intensive industries, to sound out their reactions to the government's move to increase daily minimum wages. Commerce Minister Porntiva Nakasai will chair the meeting.

The ministry has frozen the prices of several products but the freeze will end this year. Prices are expected to rise next year for such products as chemical fertilisers, pesticides, palm oil and agricultural crops.

Watchari Wimuktayon, director-general of the Internal Trade Department, noted that coupled with the increasing crop prices, the wage hikes, effective on January 1, would certainly boost the production cost of consumer products.

The department plans to establish working groups to consider manufacturers' requests for price hikes in detail.

From January 1, minimum wages will rise in a range of Bt8-Bt17.