The Cost of Living in Thailand
One of the most common themes on Stickman’s site recently is that of the rising cost of Thailand. Every week there are posts complaining about prices and how much they have gone up. Stick himself dedicated a weekly column on the subject.
This post addresses the issue from a quantitative point of view, and hopes to address the question: “Is Thailand more expensive than it was ten years ago, and by how much?”
Before people write to complain, I am NOT calculating the cost of bar drinks, lady drinks, bar fines or short time/long time. I am ONLY researching the actual cost of living in Thailand, that is: housing, food, clothing, transportation, utilities, etc. These items are well researched every year by 3rd parties, and generally lumped together under what is called the Consumer Price Index (CPI).
I chose 2008 as my starting point so that we are looking at a 10 year analysis. Ten years seems like a long enough period to be meaningful.
OK, here we go.
The following chart shows inflation for the ten years from 2008 to 2018, for various countries:
|Total Inflation (% Change in CPI)||% Average Annual Inflation||% Change vs other countries|
What does this tell us? Using 100 as a base, from 2008 until 2018 the cost of living in Thailand rose 20%, an average of 1.8% per annum. However, this was less than prices rose in the UK or Australia, and more than prices rose in the US, New Zealand or the Eurozone. Prices in Thailand rose 8% less than in the UK (100 minus 92), in Australia 2% less (over 10 years). Compared with the Eurozone, prices to live in Thailand rose 6% more.
Wait, you will say. This only looks at costs in Thailand in Thai baht. It doesn’t take into account the change in exchange rates. What if I get paid not in Thai Baht but in my own currency?
You are correct. So, for the next part of the analysis we need to look at the change in the baht vs other currencies.
I took the same 10 year period, looking at the baht on Jan 1 2009 vs Jan 1 2019 (I could have done this analysis until the current date of this post but I wanted it comparable with the inflation figures, which are only available through 2018).
This chart tells a different story. Although the baht strengthened about 8% against the USD and AUD (and actually weakened 7% against the NZD), it appreciated strongly against both the pound (26%) as well as the Euro (31%). If you were being paid in those currencies you had to pay significantly more for your baht since 2008.
|Jan 1 2009||Jan 1 2019||Index Change|
|Thailand||Value of Local Currency in Baht||Value of Local Currency in Baht||% Baht strengthened against local currency|
Now let’s put these two charts together. So, for example, in the UK (from the 1st chart) costs rose in Thailand 8% less than they rose in the UK, but the baht appreciated 26% so the total cost difference was 16%. (Look at the last chart below). Said another way, after taking into account the depreciation of the pound vs the baht, the increased cost of living in Thailand is 16% more than living in the UK.
Mind you, that’s over 10 years, so the average yearly increase in cost for Thailand vs the UK, in pounds, is about 1.5%.
In summary, someone being paid in Euros will be spending 39% more in Thailand now vs ten years ago, a Brit paid in pounds, 16% more. Americans and Australians, in their own currency, have to pay 11% and 6% more to live in Thailand vs 10 years ago, while those lucky Kiwis actually pay less. (Again, I remind you, since that’s over ten years, the annual change is much less. Even for Europeans it’s about 3% per year).
|Inflation Index||Baht Index||Thai Inflation in Home currency|
Here’s another few charts if you’re not yet asleep.
The Economist years ago created the Big Mac index, which compares the price of a Big Mac in every country. This uses constant dollars, that is, the cost in the local currency has been converted using the exchange rate of the day.
This chart shows us that, in US dollars, the cost of a Big Mac in Thailand more than doubled over ten years (as, by the way, did Australia). However, it is still cheaper to buy one in Thailand than any of the other listed countries.
Let’s say that again: while the cost of a Big Mac rose more in Thailand than the other countries surveyed, it is still cheaper to buy one in the Kingdom than in most readers home country.
|2019 Big Mac
|2009 Big Mac
By the way, as of January 2019 the most expensive Big Mac in the world was in Switzerland ($6.62) and the cheapest in…Russia! ($1.65).
OK, last chart, and then I’ll let you go. Here’s the Starbucks latte index, which compares the cost of a tall latte in major capitals.
What does all this tell us? Who knows? My own conclusion is that costs are in the eye of the beholder. It’s not the monetary cost of something that’s important, but the value it gives you. You can spend 1000 baht and have a lousy time, and 3000 baht and have a great time. And vice versa. If you want to sit and think about the good old days when everything was cheaper then feel free to do so, but you’re living in the past. We’re all here today, like or not, and the girls may have tats and braces and carry cell phones and, guess what, you and I are also different than we were ten years ago. Part of staying mentally young is looking forward, not backward. And no number in the world is going to teach you how to do that.
I don’t doubt that your numbers are right and they would apply to everyday Thais. At the same time I am not sure that using the CPI works so well when talking about foreigners as much of what foreigners spend their money on in Thailand is not measured in the CPI, I should imagine!
The author of this article can be contacted at : [email protected]