Thai headline inflation remains stable year-on-year in April, BoT to keep policy rate unchanged in May

Thai headline inflation remained widely stable in April. On a year-on-year basis, the consumer price inflation came in at 1.23 percent, the second consecutive month of remaining within the Bank of Thailand’s 1 percent to 4 percent target band.

Sequentially, the headline rate accelerated slightly to 0.44 percent. The sequential rise mainly reflected increased raw food prices, especially fresh vegetables in the midst of dry weather, though a high base last year signified that raw food inflation eased in terms of year-on-year. Sequentially, energy prices rose as well, however, the pace of rise eased.

Core inflation rose in April, however, it came in at 0.61 percent year-on-year, continuing to be very subdued. Sequentially, core CPI rose a bit by 0.06 percent, reflecting muted price changes in categories such as apparel and footwear, housing and furnishing, medical and personal care, recreation and education, non-alcoholic beverages as well as tobacco and alcoholic beverages.

The underlying price pressures continue to be weak. While increased oil prices and unfavourable weather might put upward pressure on inflation, Thailand’s inflation is starting from a very low level, and the BoT’s 1 percent to 4 percent target band will not threatened, noted ANZ in a research report.

“Coupled with the downside risks to growth, the stage is set for a prolonged rate hold. We are expecting the BoT to keep its policy rate unchanged at 1.75 percent not just at its May meeting, but also for the rest of the year”, added ANZ.