Thailand’s July Inflation Below Expectations, Ministry Projects Continued Moderation


Bangkok, Aug 7, 2023 – Thailand’s annual headline inflation for the month of July has proven to be more subdued than initially expected, driven by a decline in both food and energy prices. The Ministry of Commerce announced this development during a press conference today, shedding light on the country’s evolving economic landscape.

According to official data, the headline Consumer Price Index (CPI) experienced a modest uptick of 0.38% compared to the previous year. This figure defied projections from a Reuters poll, which had estimated a more substantial increase of 0.64%. This follows a similarly restrained inflation rate of 0.23% recorded in the month of June.

This marks the third consecutive month during which headline inflation has fallen short of the Bank of Thailand’s (BOT) targeted range of 1% to 3%, signaling a persistent trend in the economy’s inflationary pressures.

Poonpong Naiyanapakorn, the authoritative figure at the helm of the Ministry’s trade policy and strategy office, revealed insights during the press briefing. Naiyanapakorn stated that the upcoming month of August could witness a slight acceleration in the headline CPI as certain food prices rebound in the wake of drought conditions. Concurrently, expectations loom for an uptick in energy prices.

Despite these potential fluctuations, Naiyanapakorn expressed confidence in the overall inflation outlook for the remainder of 2023. He projected an average headline inflation rate of 0.36% for the latter half of the year.

In a decisive move, the commerce ministry reaffirmed its earlier forecast of average annual headline inflation hovering between 1% and 2%. This prediction, initially established earlier this year, is set to undergo a thorough review come September.

Intriguingly, Naiyanapakorn dismissed any significant impact on consumer purchasing power stemming from the ongoing delay in the formation of a new government. As the nation awaits political clarity, consumer spending appears to be holding steady.

Diving deeper into the inflationary data, the core CPI, a measure that excludes volatile food and energy prices, demonstrated a year-on-year increase of 0.86% for July. This surpassed the 0.90% rise forecasted by industry experts in the aforementioned poll. June’s core CPI, in contrast, posted a steeper increase of 1.32%.

Just last week, the central bank took decisive action by elevating its key interest rate for the seventh consecutive meeting, reaching a benchmark rate of 2.25%. This maneuver was primarily motivated by persistent concerns surrounding inflation risks. The Bank of Thailand is scheduled to conduct its next comprehensive review of monetary policy on September 27, providing further insights into the nation’s economic trajectory.

Examining the larger timeframe, the first seven months of the year have witnessed a headline CPI increase of 2.19% year-on-year. Meanwhile, the core CPI saw a more subdued rise of 1.73% during the same period, reflecting a nuanced inflationary environment.

As Thailand navigates the intricacies of its economic landscape, these inflation figures offer a glimpse into the delicate balance between consumer spending power and price stability, setting the stage for potential policy adjustments in the months to come.


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