Thai consumer price inflation to have accelerated in August, core print likely stayed stable - DBS

Thai consumer inflation is likely to have accelerated in August. According to a DBS Bank research report, Thai headline inflation gauged by the consumer price index is expected to have risen to 0.3 percent year-on-year in August. Meanwhile, core inflation is expected to have stayed stabled at 0.5 percent. Transport inflation has subdued along with global crude oil prices in recent months. Food inflation continues to be negative, staying low just like the trend elsewhere in the region. Core inflation is moving sideways, continuing to imply that there is little pressure on the demand side, stated DBS Bank.

The Bank of Thailand has hinted that it does not expected to lower rates anytime soon, but inflation is likely to continue coming in weaker than expected and come below the 2.5 percent target for some time. At this stage, the forecast implies an early-2020 date for CPI inflation to return to the Bank of Thailand’s comfort zone, depending on how crude oil price trajectory is going forward, said DBS Bank.

Meanwhile, demand-pull inflationary pressure is expected to matter too. The second quarter economic data showed that private investment growth has rebounded slightly in the period; however, most of this was because of base effects. Even if the private sector expanded at a decent 3.1 percent year-on-year in the second quarter, it has just averaged 2.2 percent over the past four quarters, weaker than the 3.8 percent chalked in the flood-distorted 2011.

“As long as we don’t see core inflation trending up, it is difficult to expect a sharp move in the headline inflation as well”, added DBS Bank.

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