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Thailand Inflation September 2019

Thailand: Inflation falls to eight-month low in September

Consumer prices rose 0.10% month-on-month in September, contrasting the 0.19% decrease in August. The result reflected pricier food and non-alcoholic beverages, and housing and furnishing, offsetting cheaper transportation and communication prices.

Inflation ticked down from 0.5% in August to 0.3% in September, representing the lowest print in eight months. Moreover, the print came in below expectations of a softer moderation in inflation and markedly below the Central Bank’s target range of 1.0%–4.0%. Core inflation, lastly, edged down from 0.5% in August to 0.4% in September.

Prakash Sakpal, Asia Economist at ING, noted that “with inflation further undershooting its target, the BoT should move to cut rates sooner rather than later. […]. The base year effect is turning favourable and this could result in some pick-up in the annual inflation rate over the rest of the year [but] it is hard to imagine it staying in the target range on a consistent basis”. This sentiment was reiterated by the research team at Goldman Sachs, which noted that they “expect headline inflation to remain subdued on low global oil prices relative to 2018 and the absence of strong demand pressure”.

With the Bank of Thailand meeting next on 6 November, views on what the latest reading means for monetary policy diverged. Prakash Sakpal commented that ING sees “no merit in the BoT delaying what looks to us as to be an inevitable and much-needed rate cut. If nothing else, it might help to rein in the currency appreciation that the authorities are increasingly concerned about”. The team at Goldman Sachs was more cautious. While acknowledging that the stated risks are tilted toward another policy rate cut, they expect “the BoT to keep policy rates unchanged through the year, given resilient albeit sequentially slower growth outlook, weak inflation and financial stability concerns”.

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