Kiatnakin Phatra Securities (KKPS) wrote that Thailand’s headline inflation continued its downward trend in June, registering a year-on-year increase of 2.42%, compared with 2.79% in May, and a month-on-month decline of 0.34%. This moderation was largely attributable to easing energy prices and deeper contractions in raw food costs. Meanwhile, average headline inflation for the first half of 2026 stood at 1.1% year-on-year.
Lower prices for meats, poultry, and fish contributed to a -0.75% year-on-year change in raw food prices in June, compared with a -0.34% decrease in May. However, price increases persisted in categories such as rice, flour, cereal products (up 2.39% year-on-year), eggs and dairy products (up 1.23% year-on-year), and fruits and vegetables (up 0.14% year-on-year). Energy inflation slowed to 13.7% year-on-year from 18.09% in the previous month, reflecting weaker global energy prices.
Despite the moderation in headline inflation, core inflation continued to rise, reaching 1.23% year-on-year and 0.27% month-on-month. Price gains in prepared foods and public transportation were key contributors: prepared food inflation climbed to 3.05% year-on-year, driven by ready-to-eat meals and restaurant foods, while public transport fares surged 9.57% year-on-year. Food delivery prices also rose after a previous decline.
Kiatnakin forecasts that headline inflation will stabilize in the second half of the year, peaking at around 3.2% year-on-year in the fourth quarter. This is expected to be influenced by the base effect of lower energy prices and continued cost pass-through in selected prepared food categories.
Given weak household demand, broader spillover effects remain limited. As a result, the likelihood of a policy rate hike by the Bank of Thailand has diminished, barring a sharp baht depreciation or wider inflation pass-through.
