Thailand: Inflation comes in at highest level since April 2023 in May
Inflation came in at 1.5% in May, which was up from April’s 0.2%. Accordingly, inflation moved into the Central Bank’s 1.0–3.0% target range. May’s result was the highest inflation rate since April 2023 and surprised markets on the upside. The increase was spearheaded by a rebound in prices for housing and utilities, and a sharper rise in transportation prices. These developments were caused by the removal of the diesel price subsidy and a low base effect.
The annual average variation of consumer prices was flat in May (April: -0.1%). Meanwhile, core inflation was stable, coming in at April’s 0.4% in May.
Lastly, consumer prices rose 0.63% in May over the previous month, below April’s 0.85% rise.
Nomura analysts commented on the outlook:
“Taking into account the reversal of base effects and falling oil and raw food prices so far this month, we expect headline inflation to undershoot the BOT’s target range again as soon as June, against the MOC’s guidance today of 1.0-1.1%. However, we see some upside risks to our full-year forecast from the continued hike in the diesel prices after the removal of the subsidy and the sharp increase in raw food prices in both April and May.”