Thai headline inflation lowest in 15 months, to fall further

THAILAND’S headline inflation cooled in March to its lowest rate in 15 months, and came in below expectations due to lower energy and food prices. This downward trend is likely to continue this year, the commerce ministry said on Wednesday (Apr 5).

The headline consumer price index (CPI) rose 2.83 per cent in March from a year earlier, compared with a forecast rise of 3.3 per cent in a Reuters poll, and against February’s 3.79 per cent increase.

The core CPI index was up 1.75 per cent in March from a year ago, the slowest pace in 14 months and below a forecast increase of 1.82 per cent.

Headline inflation returned to the central bank’s target range of 1 per cent to 3 per cent for the first time in 15 months, and the commerce ministry expects it to remain within this range for the rest of this year.

Last week, the central bank raised its policy rate for a fifth straight meeting, and said that its policy tightening would continue since inflation, while slowing, remained higher than in the past.

The central bank has hiked the benchmark interest rate by a total of 125 basis points since August to 1.75 per cent, to contain price pressures.

The commerce ministry forecast that headline inflation would fall further this year, helped by lower oil prices, government support measures and a high base last year, senior ministry official Wichanun Niwatjinda told a news conference.

Inflation in April, however, might not fall much because of spending ahead of a general election on May 14, he said.

“But inflation will definitely be lower than 2.5 per cent from May,” he said, adding it would be around 1 per cent to 1.5 per cent from June.

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The ministry now predicts headline inflation to be 1.7 per cent to 2.7 per cent this year, down from a previous forecast of 2 per cent to 3 per cent.

From January to March, headline inflation was 3.88 per cent, with the core rate at 2.24 per cent. REUTERS