Thai headline inflation came in less negative in the month of October, aided by higher raw food inflation and easing energy deflation. On the contrary, core inflation decelerated to its softest in four months.
Thai inflation came in at -0.50 percent on a year-on-year basis, as compared with the prior month’s -0.70 percent. On a month-on-month basis, the headline CPI rose 0.05 percent, driven by a turnaround in both raw food and energy prices, which rose 0.12 percent and 0.37 percent, respectively. Core inflation eased a bit, coming in at 0.19 percent year-on-year. The drag came from personal and medical care, recreation, and education as well as housing, though the declines were modest.
Looking ahead, price pressures are expected to remain soft in the midst of a challenging growth environment, noted ANZ in a research report. While recent economic data have shown signs of improvement, the recovery would be slow-going until the significant tourism sector can get back onto its feet. However, with the global virus situation still not under control, the reopening of Thai borders will continue to take place at quite a slow pace. Markedly, Thai welcomed its first batch of foreign tourists in October.
“The upshot is that inflation looks set to undershoot the BoT’s 1-3 percent target for some time yet. Nonetheless, the central bank appears to have little appetite for further rate reductions. And while it has not ruled out embarking on unconventional policies such as yield curve control or large-scale asset purchases, it has not shown any indication that these are imminent either”, added ANZ.
