Who Pays the Bill? Distributional and Fiscal Consequences of Elevated Inflation in Thailand

By Piyaporn Chote, Corinne C Delechat, Thanaphol Kongphalee, Vatsal Nahata, Mouhamadou Sy, Pym Manopimoke, Tamon Yungvichit

February 2, 2024

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Piyaporn Chote, Corinne C Delechat, Thanaphol Kongphalee, Vatsal Nahata, Mouhamadou Sy, Pym Manopimoke, and Tamon Yungvichit. Who Pays the Bill? Distributional and Fiscal Consequences of Elevated Inflation in Thailand, (USA: International Monetary Fund, 2024) accessed December 1, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper analyzes the distributional impacts of inflation in Thailand. For that aim, the paper uses rich micro-survey data on 46,000 Thai households to study the effect of the recent elevated inflation on poverty, its distributional effects on different income levels, and the fiscal cost to compensate households from real income losses. To study the multidimensional impact of inflation, the paper also studies how inflation differentially affects households through the consumption, income, and wealth channel. The analysis shows that under a baseline scenario, poverty in Thailand could increase by 1.3 percentage points—about 900,000 people—in the absence of government intervention. Targeted fiscal support to only compensate households that are below the national poverty line from rising inflation amount to 0.05 percent of GDP. However, fiscal support to compensate relatively rich households, defined as those above the median of the income distribution, amount to 1.4 percent of GDP. Moreover, due to high levels of debt, richer households benefit from inflation relative to poorer households. Finally, the paper also delves into policy responses undertaken by the Thai government and Asian and emerging economies to mitigate elevated inflation.

Subject: Consumption, Energy prices, Food prices, Income, Inflation, National accounts, Prices

Keywords: Asia and Pacific, Consumption, Elevated inflation, Energy price, Energy prices, Fiscal cost., Food prices, Global, Income, Income effect, Inflation, Inflation component, Inflation dynamics, Poverty, Rising prices

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2024/022
Stock No:

WPIEA2024022
ISBN:

9798400266485
ISSN:

1018-5941

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