Thai Inflation Dips for Fourth Consecutive Month, But Deflation Fears Dismissed
A drop in energy and fresh food prices has driven down the consumer price index, while the Ministry of Commerce maintains its annual inflation forecast
- Thailand's headline inflation fell for the fourth consecutive month to -0.70% in July, a decline attributed mainly to cheaper energy and fresh food prices.
- Officials dismissed fears of deflation, explaining the drop was driven by specific volatile items while core inflation, which excludes food and energy, remained positive at 0.84%.
- The price drop was caused by lower global oil prices, government-led reductions in electricity tariffs, and a surplus of fresh produce resulting from favorable weather.
Thailand's headline inflation fell for the fourth consecutive month in July, reaching -0.70%, according to the Ministry of Commerce.
The decline was primarily attributed to cheaper energy and fresh food prices, though officials were quick to dismiss concerns of the economy entering a deflationary period.
The Trade Policy and Strategy Office (TPSO) revealed that lower global oil prices and a government-led reduction in electricity tariffs were key contributors to the drop.
Favourable weather conditions also led to a surplus of fresh vegetables and fruits, further pushing down prices.
Despite the negative headline figure, core inflation, which excludes volatile food and energy prices, increased by 0.84%—a slower pace than the 1.06% rise seen in June.
Poonpong Naiyanapakorn, Director of the TPSO, explained that the fall in inflation was not a sign of deflation.
"The drop in inflation is due to lower energy prices, which have a high weighting in the inflation basket, while core inflation continues to expand," he stated.
The TPSO noted that several key categories saw significant price drops, including energy (petrol, diesel, and electricity) and personal care products (skincare, shampoo, soap).
Conversely, prices for ready-to-eat meals, meat, and non-alcoholic beverages increased.
Looking ahead, the TPSO anticipates that inflation will remain low in August, with global crude oil prices staying below last year's levels.
The government's continued cost-of-living relief measures and a fall in tourism service fees are also expected to keep prices in check.
However, some agricultural goods and cooking ingredients, such as pork and coconuts, may see prices rise.
The Ministry of Commerce is maintaining its 2025 inflation forecast of 0.0–1.0%, with a midpoint of 0.5%, but noted it would be reviewed if the economic situation changes.
