Thai inflation eases to 1.95% in July, slowing for third month

THAILAND’S inflation unexpectedly eased for a third straight month, bolstering the central bank’s view that it can keep interest rates on hold to support the economy.

The consumer price index rose 1.95 per cent in July from a year earlier, slowing from 2.42 per cent in June, Commerce Ministry data showed on Wednesday (Aug 5). The reading was below the median estimate in a Bloomberg survey of economists, who had expected inflation to accelerate.

Bank of Thailand Governor Vitai Ratanakorn and his policymakers left the benchmark interest rate unchanged in June, saying inflation should ease as supply pressures subside.

Vitai said in early July that inflation this year is likely to come in below the central bank’s 2.8 per cent forecast. The next rate decision is due on Aug 26.

On a monthly basis, the index fell 0.73 per cent in July, compared with a 0.34 per cent decline in June and a median economist estimate of a 0.2 per cent drop. Core inflation edged up slightly to 1.34 per cent, from 1.23 per cent in June. 

Nantapong Chiralerspong, director-general of the Commerce Ministry’s Trade Policy and Strategy Office, attributed the slowdown in inflation primarily to a sharp decline in domestic fuel prices in July, in line with lower global oil prices. BLOOMBERG