Thailand's headline inflation at 0.4% in Dec

JANUARY 03, 2019 - 9:20 PM

Thailand’s headline inflation rose 0.4 per cent in December, dragged down by food and energy prices and base effects.

It missed economist estimates of 1 per cent, and was down from 0.9 per cent in November.

Core inflation rose 0.7 per cent, unchanged from November.

In a report by Citi, core inflation suggested that domestic demand remains stable but there is no acceleration in overall price trend, despite the gross domestic product (GDP) deflator maintaining moderate growth in 3Q18.

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In particular, personal-care and prepared food prices recorded continued gains in Dec, but costs for house rent, medical care, recreational activities slowed.

Inflation for 2018 was 1.06 per cent, just above the lower bound of 1-4 per cent policy target. It also beat the previous two years at 0.2 per cent and 0.7 per cent.

Citi economist Nalin Chutchotitham said that while this helped to partly justify the Bank of Thailand’s recent policy rate hike from 1.5 per cent to 1.75 per cent, it would be “difficult” to justify a rate hike in 2019, given downside risks to the inflation outlook.

According to the report, planned increases in electricity and transport prices are also unlikely to move the inflation needle much.