THAILAND: Inflation Expected To Return To Band In Q4

Inflation in Thailand remains very low with headline moderating to 0.4% y/y in August from 0.8% and core up only 0.1pp to 0.6% y/y, in line with expectations. The Bank of Thailand (BoT) has said that it doesn’t see signs of deflation and will focus on the outlook and monitor developments in subsidies. With rates around neutral and only two meetings before year end, it may not ease before 2025 but Governor Sethaput said that it will adjust monetary policy if needed.

• The Ministry of Commerce said that September inflation may be boosted by higher oil prices and the impact of flooding. Base effects are also likely to boost the annual rate. It expects the CPI to be 1-1.5% in Q4, back within BoT’s target band.
• Higher food inflation of 1.8% y/y in July was driven by fruit and vegetables, non-alcoholic beverages and meat. This was offset by lower transportation prices and energy in general, due to lower global prices. Government price controls also keep a cap on transport prices.
• Imported inflation remains elevated at 8% y/y but off the May peak as both consumer goods and raw materials are high.

Thailand CPI y/y%