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Thailand’s headline inflation lowest in 16 months
In April 2023, Thailand experienced a significant drop in its headline inflation, which measures the change in the prices of a basket of goods and services consumed by households.
According to the commerce ministry, the headline consumer price index (CPI) rose by only 2.67% year-on-year, the lowest rate since December 2022. This was close to the expectations of a 2.7% increase in a Reuters poll.
The main factors behind the decline in inflation were lower energy and food prices, as well as a high base effect from 2022. Energy prices fell by 1.9% month-on-month, while food prices decreased by 0.4%. The high base effect means that inflation was lower because it was compared to a higher level of prices in the same month of the previous year.
The core CPI, which excludes volatile items such as food and energy, also slowed down to 1.66% year-on-year, the lowest rate since January 2022. This was below the forecast of a 1.7% increase in a Reuters poll.
The commerce ministry said that headline inflation should fall further in May, possibly below 2%, due to a higher base effect and lower fuel prices. It maintained its forecast for the average headline inflation for 2023 at between 1.7% and 2.7%, which was revised down from 2% to 3% last month.
Headline inflation has returned to the Bank of Thailand’s (BOT) target range of 1% to 3% for the second consecutive month. However, the BOT has been tightening its monetary policy since March, when it raised its policy interest rate by 25 basis points to 1.75%, citing persistent inflation risks. The next policy review is scheduled for May 31, when economists expect another rate hike.
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