Thailand Inflation November 2019


Thailand: Inflation inches higher but remains below target

December 4, 2019

Consumer prices fell 0.13% month-on-month in Thailand in November, marginally up from the 0.16% monthly decrease in October. The print came on the back of cheaper food and non-alcoholic beverages, housing and furnishing offsetting a small rise in transportation and communication prices.

Meanwhile, inflation remained firmly below the Bank of Thailand’s 1.0%–4.0% target range, rising 0.2% in November, up from the 0.1% increase registered in October. Core inflation, which excludes raw food and energy, also edged higher, rising from 0.4% in October to 0.5% in November.

The stream of muted inflation readings—November marked the fourth month running of below-target inflation—provides room for the Bank of Thailand to loosen its monetary policy stance. However, analysts at Goldman Sachs see the Bank holding fire until the first quarter of the new year. Explaining their views, analysts highlighted that they “expect headline inflation to remain below the lower bound of BoT’s target band […] in H1 2020, given low global oil prices and the lack of strong demand pressure.” In addition, they also foresee economic growth remaining below potential and the currency’s strength to persist.

Shaoyu Guo, analyst at JPMorgan, also expects inflation to remain subdued heading into the new year and the Bank of Thailand to stay put in its next meeting in December. Guo stated that JPM expects the Bank to “keep the policy rate unchanged […] as they monitor the impact of the implemented policy rate cuts and capital flows measures on growth and the FX”.

Going forward, FocusEconomics Consensus Forecast panelist see inflation picking up slightly and returning to target; however, inflation is seen remaining relatively muted. The panel expects inflation to average 1.2% in 2020, which is unchanged from last month’s forecast. For 2021, panelists predict average inflation of 1.4%. The Bank of Thailand, meanwhile, foresees inflation averaging 1.0% in 2020.

Author:, Economist

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Thailand Inflation Chart

Thailand Inflation November 2019 1

Note: Annual and monthly variation of consumer price index in %.
Source: Ministry of Commerce and FocusEconomics calculations.

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