Thai inflation drops to nine-month low

THAILAND’S headline inflation cooled to its lowest rate in nine months and came in below analyst forecasts, helped by easing energy and food prices.

The headline consumer price index (CPI) rose 5 per cent in January from a year earlier, data from the country’s Ministry of Commerce on Monday (Feb 6) showed. This was below the 5.1 per cent increase forecast by analysts in a Reuters poll.

Senior ministry official Wichanun Niwatjinda said that inflation was expected to be below 5 per cent in February on lower oil prices. “Oil accounted for one percentage point of inflation in January. So, if oil prices fall, it will reduce inflation a lot,” he said.

Still, the inflation rate remained above the Bank of Thailand’s target range of between 1 per cent and 3 per cent. This suggests that the central bank could raise its key interest rate further, after hiking it at four consecutive meetings in an attempt to bring prices back within target.

The core CPI index was up 3 per cent in January from a year ago, below a forecast rise of 3.1 per cent. Earlier, the Bank of Thailand said that a continuing gradual rate rise was an appropriate course for a policy consistent with growth and inflation. It will review its policy on Mar 29.

Minister of Finance Arkhom Termpittayapaisith said inflation should return to target this year. Sharing a similar view, the commerce ministry maintained its forecast for headline inflation between 2 per cent and 3 per cent in 2023, having taken into account the upcoming elections and a rebound in tourism.

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Wichanun said the ministry predicted 22 million to 25 million foreign tourist arrivals this year, adding that higher tourist numbers would increase demand-side inflation.

In 2022, headline inflation in Thailand hit a 24-year high of 6.1 per cent, with the core rate at 2.5 per cent. REUTERS