Thailand’s deflation streak and deadly floods pile pressure on rate cut
The country’s worst flood on record, which has killed nearly 200 people and so far caused an estimated 500 billion baht in losses
[BANGKOK] Thailand’s consumer prices fell for the eighth straight month, heightening pressure on the central bank to cut its policy rate for a fourth time this year.
The consumer price index fell 0.49 per cent in November from a year earlier, the Commerce Ministry said on Wednesday (Dec 3). That’s less than the -0.6 per cent median economist estimate in a Bloomberg News survey.
On a monthly basis, the index rose 0.15 per cent, faster than expectations. Core inflation ticked up 0.66 per cent.
Falling prices, coupled with southern Thailand’s worst flood on record, which has killed nearly 200 people and so far caused an estimated 500 billion baht (S$20 billion) in losses, may push policymakers towards another monetary easing at the Dec 17 meeting.
Thailand has struggled to keep inflation within the central bank’s 1 to 3 per cent target for most of the past decade. From 2015 to 2016, headline inflation stayed negative for 15 straight months. At its Oct 8 meeting, the Bank of Thailand surprised markets by keeping rates unchanged to preserve policy space after cutting a cumulative 100 basis points since October last year.
Governor Vitai Ratanakorn, who will cast his second vote since taking office in October, has said that there’s room to lower borrowing costs further if needed. He also stressed that Thailand’s slowdown stems from structural problems that monetary policy alone cannot fix.
“The primary drivers behind the continued decline were the decreasing prices of energy, including household electricity and fuel, following the global energy market situation and government measures to ease the cost-of-living burden,” Nantapong Chiralerspong, director-general of the Trade Policy and Strategy Office, said. BLOOMBERG
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