Bangkok: Yingluck Shinawatra became Thailand's first female prime minister by pledging to lift rural incomes through higher rice prices. The rest of Asia may now have to pay for her campaign promise.

Yingluck has said the government will buy unmilled grain from farmers at 15,000 baht (Dh1,843) a tonne at harvest in November, above current market rates of 9,900 baht. With Thailand the world's biggest exporter, that may raise rice prices across a region that accounts for 87 per cent of global consumption. The leader presented her econ-omic policies to Cabinet yesterday and is scheduled to announce them publicly by August 24.

"High rice prices will translate into higher inflation pressures in Asia, at a time when most inflation readings are flirting near the higher end of central-bank target or forecast ranges," said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. "Once the global backdrop stabilises, inflation could come back strongly."

The acceleration of policies to boost consumption in Thailand risks complicating monetary policy across Asia, as soaring food costs add pressure for higher interest rates while the region braces for a growth slowdown.

South Korea, Malaysia, and the Philippines have left borrowing costs unchanged in recent weeks, while China, India and Thailand raised rates in July to tame inflation.

Food makes up more than 30 per cent of inflation indexes on average in Asia, according to Rabobank Groep NV. The weighting of rice in consumer-price indexes varies from 9.4 per cent in the Philippines, 4.7 per cent in Indonesia and 2.9 per cent in Thailand, according to Bank of America. The fondness for certain foods in Asian cuisine — from onions in India to peppers in Indonesia — has left some of the region's central banks grappling with the challenge of responding to surges in the cost of staples.

Rice, the staple food for about half of the global population, has surged about 55 per cent in the past year according to futures traded on the Chicago Board of Trade.

Jump in exports

The export price of rice from Thailand has jumped 24 per cent in the past year, to $567 (Dh2,082.65) per tonne in the week ended August 3. That may rise to $700 by the end of December, according to the median estimate in a Bloomberg survey.

The Thai government also paid above-market rates for rice in 2008 to boost incomes and bought 5.4 million tonnes of it from about 700,000 farmers, according to the Internal Trade Department.

Thailand will pay 15,000 baht per tonne for unmilled rice and 20,000 baht for jasmine rice, Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong said yesterday.