Factors Affecting the Consumer Price Index in Thailand

Abstract

This paper aims to study the economic factors affecting Thailand's Consumer Price Index (CPI). It examines the relationship between the consumer price index and economic variables, including both demand and supply factors, such as Gross Domestic Product (GDP), Broad money supply (M2), Producer Price Index (PPI), Crude oil prices (OIL) and Exchange rates (EX). This quantitative research employs quarterly time-series data from the first quarter of 2012 to the fourth quarter of 2022, totaling 40 quarters. The dependent variable is the Consumer Price Index (CPI), while the independent variables are GDP, M2, PPI, OIL, and EX. Data collection was conducted quarterly by government agencies, including the Bank of Thailand, the National Economic and Social Development Council Office, and the Trade Policy and Strategy Office of the Ministry of Commerce. The data analysis used the Vector Autoregressive Model (VAR Model). The research findings indicate that the variables under study, Gross Domestic Product, Broad money supply, Crude oil prices, Producer Price Index, and Exchange rates, have a long-term equilibrium relationship at significance levels of 0.01 and 0.05. The factor with the most significant impact on the consumer price index is the Broad money supply, followed by the Producer Price Index, Gross Domestic Product, and Crude oil prices, respectively. The Exchange rate is the factor with the least impact on the Consumer price index.