Thailand Trims Down Full-Year Inflation Forecast to 1%-2% as Prices Fall

The Thai inflation forecast for 2023 has been cut from 1.7%-2.7% to 1%-2%, the Ministry of Commerce said on Wednesday, after consumer prices in June dropped to their lowest level since 2021 due to lower energy and food prices.

Official data indicated that the price index increased by 0.23% in June compared to the same month a year ago, which was lower than the 0.53% gain seen in May but still above market estimates of a decline of 0.0% to 0.15%.

Excluding volatile food and energy costs, the core gauge grew 1.32% annually, its lowest rate since the beginning of 2022 and below the 1.4% forecast. The ministry reported that consumer prices increased by 0.6% from May to June, which was higher than the 0.4% increase that was predicted.

Officials at the Bank of Thailand (BOT) recently stated that it is likely to continue with monetary tightening despite price pressures easing each month this year and being below the BOT’s 1% to 3% target range. This is because a tourism-led pickup in economic activity and possibly higher spending by a new government pose risks to inflation.