Thai headline inflation remains unchanged in October, BoT to continue with accommodative monetary policy

Thailand’s headline inflation remained the same in October and came in well below the official forecast corridor of 1 percent to 4 percent. On a sequential basis, the headline inflation rose 0.16 percent, as compared with the 0.58 percent sequential rise in September. Most of the rise was accounted for by a seasonal rise in prices of fresh produce, tobacco and alcoholic beverages. The excise taxes on the latter had been raised in September.

Meanwhile, core inflation came in at 0.58 percent year-on-year; however, on a sequential basis it remained unchanged at 0.09 percent. The 3.44 percent sequential rise in tobacco and alcoholic beverages was countered by price declines in other categories. Indeed, prices of all other categories rose at a slower rate or declined on a sequential basis. This inflation profile validates the view that domestic demand has not rebounded enough to engender price pressures in the economy, noted ANZ in a research report.

Therefore, the Bank of Thailand does not need to step away from its currently accommodative monetary policy. Furthermore, the real policy rate in Thailand continues to be positive and in a regional context, is lower than just in India and Indonesia, stated ANZ.

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