Thai consumer price inflation decelerates in October

Thai consumer price inflation slowed down in October on a year-on-year basis, coming in below market projections. The headline inflation decelerated to 1.23 percent year-on-year, whereas the sequential rate came in at 0.06 percent.

Sequentially, the rate of increase eased in food as well as in non-food components. At the non-food level, many components such as clothing and footwear, housing, recreation, tobacco and alcoholic beverages either saw sequential price falls or rise at a milder rate than in the prior month.

The core inflation rate also slowed down in the month, decelerating from 0.80 percent in September to 0.75 percent in October. The rate of rise in energy costs also fell in the month, easing to 0.13 percent sequentially after averaging 0.87 percent in the earlier three months.

The soft inflation print follow more moderate real activity data for the month of September released lately, noted ANZ in a research report. Several indicators, such as private investment, exports and agriculture wage growth softened anew. The manufacturing PMI for the month of October also slipped into contractionary territory.

“Soft inflation and weakness in real activity mildly challenge our call for a 25bp hike in the policy rate later this month. Our view was that strong economic activity data provides a window of opportunity to normalise monetary policy to safeguard against risks of financial instability and to rebuild policy space”, added ANZ.