Thailand's consumer inflation at 35-month low with 1.11% YoY decline

Thai inflation declines: Thailand experienced a drop in its annual consumer inflation rate, reaching its lowest point in 35 months in January, according to recent data. The consumer price index (CPI) fell by 1.11 per cent year-on-year (YoY), marking the fourth consecutive monthly decline. Factors contributing to this downturn include government energy subsidies, reduced food prices, and a high base effect from the previous year.

The Commerce Ministry anticipates a further easing of price pressures in the first quarter, with a projected 0.7 per cent YoY decrease in the headline CPI. Despite persistent inflation below the central bank's target range of 1 per cent to 3 per cent, the Bank of Thailand (BOT) is expected to maintain its policy rate at 2.50 per cent, a level unchanged for over a decade, as indicated by a Reuters poll. BOT Governor Sethaput Suthiwartnarueput emphasised that the current policy rate is considered "broadly neutral," and negative headline inflation is not viewed as a concern.

The central bank, which had increased its key rate by 200 basis points since August 2022 to address inflation, opted to keep it steady during the November review. The Commerce Ministry's outlook for 2024 maintains a forecast for headline inflation ranging between -0.30 per cent and 1.7 per cent, in line with last year's figure of 1.23 per cent. Despite the decrease in headline inflation, the core CPI, excluding fresh food and energy prices, saw a modest YoY increase of 0.52 per cent in January, slightly below the forecasted 0.57 per cent.

(With Reuters Inputs)