Thailand inflation moderates ahead of central bank rate decision

Thailand's headline inflation moderated in July ahead of next week's central bank interest-rate review.

The consumer price index (CPI) accelerated 7.61 per cent in July, official data showed on Friday (Aug 5). That's slower than the median 8 per cent gain predicted by economists in a Bloomberg survey and compares with 7.66 per cent rate in June. Core inflation surged to 2.99 per cent, compared with an estimate for a 2.63 per cent gain.

The higher core CPI print may give the Bank of Thailand (BOT) the nudge needed to raise rates when its monetary policy panel meets next week. All 15 economists surveyed by Bloomberg as of Friday morning see the BOT lifting the policy rate from a record low of 0.5 per cent to tame inflation, which has stayed above the central bank's target this year despite billions of dollars spent in state subsidies to ease the cost of living.

BOT governor Sethaput Suthiwartnarueput has said rate hikes will be gradual to ensure that higher borrowing cost doesn't derail the economy's recovery. A better-than-expected rebound in tourism, which accounted for about a fifth of Thailand's economy and jobs before the pandemic, may also give room for the central bank to begin policy normalisation. BLOOMBERG