Thai headline inflation decelerates for third straight month in October, BoT likely to cut rates again by 25 bps

Thai headline inflation decelerated for the third consecutive month in October. On a year-on-year basis, the consumer price inflation slowed down to 0.11 percent, driven by a sharper drop in energy prices and a slower pace of rise in raw food prices. The October headline print is the softest since June 2017.

Sequentially, headline CPI dropped 0.16 percent in October, more than reversing the 0.10 percent rise in September. Food prices dropped 0.10 percent sequentially with meat, poultry, and fish showing the sharpest fall of 0.83 percent.

Non-food prices also dropped 0.18 percent, owing to lower transportation prices that dropped 0.52 percent. Tobacco and alcoholic beverages prices dropped 0.08 percent, whereas prices of clothing and footwear, housing and recreation and education prices remained steady. Personal and medical care was the only major non-food category to record higher prices.

Core inflation came in at 0.04 percent sequentially, decelerating from the 0.09 percent print seen in the prior month. On a year-on-year basis, it remained steady at 0.44 percent year-on-year.

“While inflation is unlikely to dip further as high base effects start to fade, the big picture is that price pressures remain weak. Coupled with the recent deterioration in economic data, particularly manufacturing output and domestic demand indicators, we see the Bank of Thailand making one more 25bps cut this year, if not next week”, said ANZ in a research report.