Thai headline and core inflation rise in November, BoT likely to keep policy rate stable for some time

Thai headline and core inflation came in line with expectations in November, mainly driven by higher crude oil prices. The headline consumer price inflation rose 0.07 percent sequentially, marking the second consecutive month of moderation. On a year-on-year basis, the headline figure rose 0.99 percent in the month.

Most of the rise on sequential basis was because of the rise in transport prices, which in turn have been influenced by increasing global crude oil prices. Even so and similar to developments in South Korea, currently strength has considerably mitigated the effect on local currency denominated prices of fuel products.

Core inflation accelerated mildly to 0.61 percent year-on-year even as monthly gains dropped to 0.06 percent sequentially from 0.09 percent. The recent rise in excise taxes on selected items are likely to underpin core inflation in months ahead, noted ANZ in a research report.

Excluding these supply side changes, inflation is expected to stay modest on back if moderate domestic demand. Domestic demand is yet to gain sufficient momentum to engender pressure on prices, stated ANZ. The Bank of Thailand is unlikely to adjust its supportive stance. The central bank is expected to maintain its policy rate stable for some time, added ANZ.

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