Prices are rising continuously—that's inflation. Make sure to understand it clearly.

What Is Inflation Really When the Whole World Faces It

An economic condition where the prices of goods and services continuously rise—that’s called inflation. From another perspective, inflation is the gradual decrease in the value of the money we hold, making the money we once used to buy many things today buy less and less, with no clear end in sight.

For example, Mr. A once had 50 baht, which could buy several bowls of rice. But when inflation explodes, the same 50 baht can only buy one bowl. Looking back decades, rice prices might have risen to 100 baht per bowl.

Inflation is not just a number; it’s a warning sign for investors, central bank officials, and policymakers because changes in inflation rates directly impact the stock market, interest rates, and individual investment decisions.

Who Benefits from Inflation

The group that benefits the most is independent entrepreneurs, shop owners, or populations with easily adjustable incomes because they can raise prices according to the situation. Unlike salaried employees, whose wages may increase slightly but always lag behind inflation, these groups tend to suffer more.

Additionally, shareholders, bankers, and debtors also benefit because the value of their debts decreases. Conversely, creditors, such as lenders, experience the opposite effect.

How Does Inflation Occur? What Are the Causes?

Inflation can be viewed from several angles:

First point: Demand-pull inflation (Demand Pull Inflation)
When consumers want more goods and services but producers cannot supply enough, sellers gain the power to raise prices. This often occurs after the economy begins to recover from a downturn, with people eager to spend after saving for a long time.

Second point: Cost-push inflation (Cost Push Inflation)
When production costs increase—such as crude oil, natural gas, coal, steel, copper—due to slowed or halted production, producers must bear higher costs, leading to higher prices for goods.

Third point: Money printing (Printing Money Inflation)
When the government or central bank prints excessive amounts of money, the money supply in the economy expands abnormally, making inflation more severe and harder to hide.

Currently, global inflation results from main economic factors like the US and emerging markets growing faster than expected. This recovery is driven by increased government and private sector spending, along with supply chain issues—such as container shortages, transportation disruptions, and semiconductor shortages—that cause significant conflicts.

Warning Signs of Stagflation Are Coming

The current global economy shows signs of entering Stagflation, a situation where inflation is high but economic growth slows down, and employment has not fully recovered. If this continues:

• Purchasing power declines
• Spending decreases
• Businesses cannot sell their products
• Profits shrink
• Companies hesitate to expand or lay off workers
• Unemployment rises
• Some businesses may have to shut down

These factors lead to a slowdown in GDP growth, creating an undesirable economic environment.

Thailand has not yet reached this point, but economic news indicates that things are still unstable. Staying informed is always important.

The Main Causes of Inflation Can Be Categorized into 3 Groups

1. Demand-pull inflation — Consumers want more goods and services than supply can provide, giving sellers the opportunity to raise prices.

2. Cost-push inflation — Production costs increase, prompting higher prices for goods and services.

3. Money printing inflation — Governments or central banks print large amounts of money, increasing the money supply and causing severe inflation.

However, the current global inflation is caused by various factors—economic resilience, increased spending, shortages of goods, geopolitical tensions, etc.

According to IMF reports from January 2024, the global economy is expected to grow by 3.1% in 2024 and 3.2% in 2025, slightly higher than previous forecasts but still below historical averages due to tight monetary policies and reduced financial support.

The good news is that inflation rates are decreasing worldwide, but risks remain from geopolitical tensions and ongoing supply chain disruptions.

How Is Inflation Different from Deflation? Understand Clearly

Deflation (Deflation) is the opposite: prices of goods and services continuously fall, possibly due to decreased demand or insufficient money supply. Producers are less eager to produce, capacity shrinks, and the economy stagnates.

Inflation — rising prices of goods and services
Deflation — falling prices of goods and services

Both, if prolonged and severe, can harm economic growth and daily life.

How Does Inflation Affect Us?

Effects on the General Public

Rising living costs—people’s purchasing power diminishes. Meat, oil, vegetables, eggs—all become more expensive. Expenses increase continuously, leading to savings being diverted elsewhere.

Effects on Entrepreneurs

When prices rise, sales decline while production costs increase. Some may delay production, cut investments, or lay off staff, leading to higher unemployment.

Effects on the Country

People buy less, businesses sell less, investment in production slows, and long-term capacity development stalls.

The History of Thai Inflation Has Many Interesting Stories

Looking back at Thailand’s history:

• 1974: Inflation soared to 24.3% due to the Israel-Arab war causing oil prices to spike.
• 1980s: Continued from the Iran-Iraq war.
• 1998: After the 1997 economic crisis, the baht depreciated, and inflation hit 7.89%.
• 2008: Reached 5.51% amid global crises.
• May 2022: Surged past 7.10% due to the Russia-Ukraine war.

What Is the CPI and How Is Inflation Measured?

Every month, the Ministry of Commerce collects data on prices of 430 goods and services to calculate the Consumer Price Index (CPI) (Consumer Price Index: CPI), which is Thailand’s main inflation measurement tool.

January 2024 data:

• CPI = 110.3
• Up 0.3% from the previous year (Base 2019 = 100)
• Overall inflation rate (YoY) = 1.11%, decreased by 1.11% compared to 2023
• MoM price index (MoM) increased by 0.02%

Reasons for the decline in inflation:

• Energy, fresh vegetables, and meat prices decreased due to government support measures
• Increased production volume lowered prices

Essential Goods Prices Continue to Rise Despite Slight Fluctuations

Like red pork, which was 137.5 baht/kg four years ago, now at 133.31 baht/kg, but last year it peaked at 205 baht/kg.

Chicken breasts rose from 67.5 baht/kg to 105 baht/kg, now at 80 baht/kg.

Eggs (size 3) used to be 4.45 baht/egg, now 3.9 baht/egg—seems lower, but previously it was over 5 baht.

Chili peppers fluctuated most—from 45 baht/kg to 250 baht/kg, now between 50-250 baht/kg. (Termites reduced to 84 baht/kg.)

LPG gas increased from 318 baht per tank to 423 baht.

Fuel prices:

• Diesel: from 28.29 baht/liter to 40.24 baht/liter
• Gasohol: from 39.15 baht/liter

Who Profits from Inflation? Real Example from PTT

PTT Public Company Limited (Public Company) benefits immensely from inflation-driven oil prices.

First half of 2022:

• Total revenue: 1,685,419 million baht
• Net profit: 64,419 million baht
• Grew by 12.7% year-over-year
• 24% of profit came from PTT’s own operations

This example shows that some companies can generate huge profits from inflation if they are in the right position.

Pros and Cons of Inflation—Depends on the Level

( Advantages of Inflation
✅ Business owners benefit — selling goods at higher prices, expanding business, increasing employment.

✅ Economic growth — more jobs, higher income, increased money circulation.

✅ Lower unemployment — economic growth drives investment demand and employment.

) Disadvantages of Inflation
❌ Rapid inflation — goods become expensive, sales decline, producers cut capacity and lay off workers.

❌ Hyperinflation — severe inflation often called “money collapse,” destabilizing the economy.

❌ Reduced purchasing power — money loses value; those holding cash without investing will lose out.

Want to Invest During Inflation? Try These

( 1. High-interest savings accounts
Deposit fixed-term savings with higher interest rates than regular deposits, suitable for risk-averse individuals.

) 2. Real estate funds
Rental income adjusts with inflation, less volatile than stocks, providing stable returns.

3. Floating Rate or Inflation-Linked Bonds

Bonds that adjust interest according to inflation, with rates changing based on inflation indices.

4. Gold

Gold prices tend to rise with inflation; a safe asset suitable for long-term holding. The higher the inflation, the higher gold prices tend to be.

5. CFD Trading on Gold

Speculate on both rising and falling prices without owning the actual asset, via platforms like Gate.io or others.

6. Stocks benefiting from inflation

Bank stocks — rising interest rates increase profit margins.
Insurance stocks — investing in bonds that yield higher returns with inflation.
Food stocks — essential goods, can set prices independently of stock market trends.

Summary: Inflation Is Not Just Something to Fear

Moderate inflation helps economic growth and expansion. But if it spirals into Hyperinflation, it becomes a real threat.

Investors find ways to profit from inflation by investing in stocks or assets that move upward with inflation.

On the other hand, deflation is the true enemy of the economy because falling prices lead to business contraction, layoffs, and economic stagnation.

Key point? Always follow the news because inflation changes with circumstances—world events, oil prices, central bank policies, and geopolitical tensions—all constantly evolving.