Thai inflation lowest in nearly three years, but central bank may hold rates
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THAILAND’S annual headline consumer inflation rate fell to its lowest in 35 months in January, data showed on Monday (Feb 5), and the commerce ministry said it expected price pressures to ease further in the first quarter.
The headline consumer price index (CPI) fell 1.11 per cent in January from a year earlier, the commerce ministry said, versus a forecast drop of 0.82 per cent in a Reuters poll, and against December’s 0.83 per cent fall.
The decline in January was the fourth in as many months and was driven by government energy subsidies, lower food prices, and a high base effect from last year, the ministry said.
It was the ninth straight month that headline inflation was below the central bank’s target range of 1 to 3 per cent.
Despite lower inflation and government pressure on the Bank of Thailand (BOT) to ease policy, it is expected to leave its policy rate unchanged at a more than decade-high of 2.5 per cent on Wednesday, a Reuters poll showed.
BOT governor Sethaput Suthiwartnarueput recently told Reuters the current policy rate was ‘broadly neutral” and negative headline inflation was not a concern or deflation.
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The central bank left its key rate steady at its November review, having raised it by 200 basis points since August 2022 to curb inflation.
The commerce ministry predicted headline CPI would fall 0.7 per cent year-on-year in the first quarter, with government measures to lower living costs the main factor.
“There is still no deflation yet as the core rate remains positive,” said Poonpong Naiyanapakorn, head of the ministry’s trade policy and strategy office.
The core CPI, which stripe out fresh food and energy prices, rose 0.52 per cent year-on-year in January, versus a forecast rise of 0.57 per cent.
For 2024, the ministry maintained its forecast for headline inflation at between -0.30 per cent and 1.7 per cent, after last year’s 1.23 per cent. REUTERS
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