Thai consumer price inflation returns to the central bank’s target band in January. On a year-on-year basis, the headline inflation accelerated to 1.05 percent. Sequentially, the inflation accelerated a bit to 0.16 percent from 0.01 percent in the prior month. Food prices rose 0.41 percent sequentially, with meat, poultry and fish recording the sharpest rise of 2.41 percent.
On the contrary, non-food prices came in flat. Personal and medical care prices dropped 0.21 sequentially, while prices of major non-food categories were either flat or saw small rises.
Meanwhile, core inflation rose 0.02 percent sequentially, while it slowed to 0.4 percent year-on-year. This suggests weak underlying price pressure.
Looking ahead, inflation is not expected to rise much further as low base effects wane, noted ANZ in a research report. The Commerce Ministry noted today that the first quarter inflation is expected to come below 1 percent as the coronavirus outbreak dents growth, countering higher food prices because of the drought.
“In terms of monetary policy, we expect the BoT to adopt a wait-and-see stance following its 25bp rate cut yesterday, but acknowledge that a further rate cut cannot be ruled out, especially if the virus spread is prolonged and fiscal policy continues to be handicapped by legal bottlenecks. Notably, BoT governor Veerathai Santiprabhob today commented that yesterday’s cut was a necessary pre-emptive move and that the central bank still has policy space left to respond to unexpected events”, added ANZ.
