Economy Thailand's Inflation Set for Positive Shift by Year-End

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Photo courtesy of Bangkok Post

 

Thailand’s inflation rate is poised to rise back into positive territory by the fourth quarter of this year, according to insights from the Trade Policy and Strategy Office (TPSO).

 

For four consecutive months—April through July—Thailand has experienced negative headline inflation. TPSO Director-General Poonpong Naiyanapakorn attributes this trend primarily to supply-side factors, notably a significant drop in fuel prices. Fuel, which constitutes 7.59% of Thailand’s inflation basket, saw a year-on-year decline of 10.2% in July, influenced by the ongoing decrease in global crude oil prices.

 

Vegetable and fruit prices have also contributed to the downward trend, with vegetables, making up 2.21% of the basket, dropping 7.07% year-on-year, and fresh fruits, accounting for 2.11%, falling by 12.1%. Favorable weather conditions have boosted agricultural output this year, in contrast to the previous year’s challenges posed by El Niño and La Niña.

 

Mr Poonpong noted that stabilizing prices in these key areas could help guide inflation back into positive territory. Global crude prices have indeed stabilised, with Dubai crude hovering between $65 and $70 per barrel, suggesting a steady outlook over the next 6-12 months. This price steadiness is expected to nudge inflation upwards.

 

Of the 464 items tracked within the consumer price index, 233 items, including prepared foods, cooking ingredients, and non-alcoholic beverages, have experienced price increases compared to last year.

 

“In the coming months, while inflation may remain slightly negative, it’s expected to turn positive in the final quarter,” Mr Poonpong explained. “Core inflation, excluding fresh food and energy, has been rising since the start of the year and is set to remain positive.”

 

The TPSO conducts regular surveys capturing public sentiment on inflation expectations. Survey respondents, spanning various occupations, anticipate goods prices to rise by 1-3%, aligning with the Bank of Thailand’s target for medium-term price stability.

 

Survey insights indicate a general expectation of rising inflation, despite the recent dip. Around 70% of respondents forecast inflation in the range of 1-3%, with few anticipating it to fall below 1% or exceed 5%. Rising food prices are seen as a major influence, along with energy costs, including fuel, cooking gas, and electricity.

 

The July survey also signalled a median inflation expectation of 1.98% over the next year, slightly down from June’s 2.02%. This reflects a public belief that the recent negative inflation is a temporary phase and that prices are likely to inch upwards soon.

 

Current trends affirm that the Thai economy is navigating towards a phase of gradual price increase, fostering confidence in future economic stability. As these dynamics unfold, the TPSO’s close monitoring and analysis will be crucial in ensuring informed policy responses and maintaining the nation’s economic health.

 

  Adapted by ASEAN Now from Bangkok Post 2025-08-18