Thailand CPI expected at 2.5% in 2016

Lower energy prices are keeping a lid on inflationary pressures. Overall inflation came in negative for the eight consecutive month in August, as lower energy prices more than offset a marginal pick up in food inflation. 

Inflation likely to remain low for some time. With energy prices being low, CPI inflation is expected to remain in negative territory through 2015, and consequently 2015 inflation forecast is downgraded to -0.7%, from -0.4% previously, but 2016 inflation is expected at 2.5%, estimates Barclays. This incorporates a lower path of energy inflation, combined with manageable food inflation and low core price pressures. 

"With an overall benign inflation path, considerable room for the Bank of Thailand is seen to maintain a very accommodative bias to support domestic activity. The BoT is likely to maintain a highly accommodative monetary policy stance, given the underlying weakness in domestic activity. A weaker THB may also delay any need for potential policy moves by the Thai central bank", says Barclays.