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Thailand narrows CPI target amid subdued price pressures

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Thailand will narrow its inflation target from next year as consumer-price growth remains subdued in the Southeast Asian nation.

[BANGKOK] Thailand will narrow its inflation target from next year as consumer-price growth remains subdued in the Southeast Asian nation.

The central bank's new goal is to keep annual headline inflation within a range of 1 per cent to 3 per cent compared with 1 per cent to 4 per cent previously, Narumon Pinyosinwat, a government spokeswoman, said Tuesday in Bangkok following a Cabinet meeting in which the change was approved. The new midpoint of the target is 2 per cent, down from 2.5 per cent before.

The medium-term goal will be flexible to provide economic stability, Ms Narumon said.

The Bank of Thailand first adopted the 1-4 per cent target in 2015, but only managed to get annual average inflation above 1 per cent in 2018. It's cited structural factors for driving down prices, including the growth in e-commerce and an aging population.

A stronger currency has also curbed price pressures in the economy, contributing to subdued inflation and weaker economic growth. The baht has surged more than 19 per cent against the dollar since the start of 2016, according to data compiled by Bloomberg.

The central bank last week held its benchmark interest rate at 1.25 per cent, matching a record low, cutting its inflation forecasts for both this year and next to below 1 per cent.

The government on Tuesday forecast inflation in 2021-2024 will be in a range of about 0.7 per cent to 1.7 per cent, while growth will reach 3.1 per cent to 4 per cent.

BLOOMBERG