Deflation softens in June

Latest reading: Consumer prices decreased 0.2% year-on-year in June, following May’s 0.6% year-on-year fall. Growth in prices for food and beverages almost doubled from the prior month in June, and transportation prices fell at a softer pace. Annual average inflation fell to 0.6% in June (May: 0.7%). Meanwhile, core inflation was steady, coming in at May's 1.1% in June. Lastly, consumer prices rose 0.02% in June over the previous month, below May's 0.26% increase.

Panelist insight: Nomura’s Charnon Boonnuch and Euben Paracuelles said: “We maintain our 2025-26 headline inflation forecasts of -0.3%, reflecting our view of weak demand and tight monetary policy. […] We see upside risks to our forecasts from the recent increase in prepared food inflation which is likely to remain sticky further out. However, we believe a further increase is unlikely given the underlying trend in raw food prices and more favourable weather conditions. We also believe these risks should be offset by the likely reduction in retail diesel prices, which remain pegged at well above the market rates (i.e., ~10%), as the Oil Fund is recovering from a large deficit.”

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