Take jasmine rice, a staple in the local diet. In 2022, a 5kg bag cost around B120. Today, it can cost upwards of B180, a staggering 50% increase. Vegetables haven’t been spared either, with previously affordable options like morning glory and green beans experiencing price hikes of B20-30 per kilogram.
Imagine a Thai family who used to spend B2,000 on groceries monthly. These price hikes could easily push their bill to B2,500 or more, forcing them to make tough choices elsewhere in their budget.
Whilst this might not affect the average expat directly, it leads to a domino effect of increased costs of goods and services provided elsewhere.
BEYOND FOOD
The rising cost of living isn’t limited to food. Utility bills are also on the rise. Electricity, previously averaging B4 per kilowatt-hour, has crept up to B5 in some areas. While seemingly small, this increase (essentially a 25% increase) makes a noticeable difference for those on a fixed income. Water bills have also seen slight increases.
Transportation costs haven’t been immune either. Public transport like songthaew (shared ‘minibuses’) remains relatively affordable, with fares around B20-30 per trip. However, their routes might not always be convenient. Taxis, once a more occasional expense, are becoming less viable due to rising fuel costs and some drivers seeking inflated fares.
INFLATION, STAGNATION AND EXPLOITATIVE RENTS
Thailand’s Consumer Price Index (CPI) rose 1.5% year-on-year in May, exceeding expectations and highlighting inflationary pressures. This, coupled with stagnant wages, creates a difficult situation for many Thais. Moody’s analysts predict inflation to rise further in the coming months.
GLOBAL HEADWINDS AND LOCAL CHALLENGES
The global economic outlook for the next three years is also concerning. Krungsri Economic forecasts sub-par growth, averaging just 3.1%. While potentially helping to cool inflation later in 2024, this sluggishness creates a challenging environment for Thailand’s export-reliant economy. Additionally, the ongoing El Niño phenomenon threatens to disrupt food supply chains through drought, potentially impacting Thailand until mid-2025.
Another major issue for Thailand is overemployment, readily apparent in sectors like retail and construction. With rapid technological advancements, this model is unsustainable and could lead to increased unemployment in the future. Reskilling and retraining initiatives will be crucial to equip the Thai workforce for a changing job market.
For expats, the situation is further complicated by a surge in rental prices. The tourism industry, now heavily reliant on Russian visitors due to geopolitical tensions, has seen a shift. While this influx may seem positive, it has fueled a new problem: greedy landlords.
Seeing an opportunity, some landlords are exploiting the situation by pushing rents upwards under the assumption that expats can afford anything and prefer short-term high-yield rents over longer-staying stable clients. This not only makes Phuket less attractive as an expat destination but also creates a housing bubble waiting to burst with new properties set to flood the market in the next 12-18 months. An inevitable market crash could leave many expats scrambling for affordable accommodations.
Adding insult to injury, with inflation rising in their home countries, many expats are finding essential goods are now cheaper back home. The allure of a tropical paradise fades when the cost of living becomes comparable, if not higher, than familiar comforts.
HUMAN IMPACT
Statistics paint a clear picture, but the true impact is felt on a personal level. Cameron (name changed to protect privacy), a British expat who has called Phuket home for 10 years, recently shared his story. "The rent for my one-bedroom apartment has gone up by 60% in the past year," he said. "While I love living here, it’s becoming increasingly difficult to make ends meet. I’m seriously considering moving back to the UK if things don’t improve."
Cameron’s story is not unique. Many expats and Thai residents alike are struggling with the rising cost of living in Phuket. The island risks losing its charm and becoming a destination only for the wealthy if these issues are not addressed.
SUSTAINABILITY OVER EXPLOITATION
The current situation paints a concerning picture for Phuket’s future. While tourism is vital, unchecked exploitation can have long-term consequences. Unrealistic rental prices and rising living costs risk driving away not just budget-conscious expats, but also long-term residents who contribute to the local economy and social fabric.
A sustainable approach is needed. Landlords should adopt a more reasonable pricing strategy, understanding that long-term tenants and a stable community benefit everyone. The government must prioritize measures to combat inflation, address food shortages, and stimulate economic growth.
Simon Causton is a long-time Phuket resident, founder of Citadel Phuket and author of ‘The Phuket Periodical’ newsletter. X (Twitter): @SimonCauston