Thailand: Inflation moderates sharply in December
Consumer prices dropped 0.65% over the previous month in December, a sharper drop than November’s 0.22% decrease. The result came on the heels of a significant drop in the price level for food and non-alcoholic beverages; transportation and communication; non-food and beverages; and raw food and energy.
Inflation marked starkly from 0.9% in November to 0.4% in December, far removed from the Bank of Thailand’s 1.0%–4.0% target range. Lastly, core inflation, which excludes raw food and energy, was stable at November’s 0.7% in December.
For 2018 as a whole, inflation averaged 1.1% and came in just above the lower limit of the Bank of Thailand’s target range. Charmon Boonnuch and Euben Paracuelles, Asia economists at Nomura, added that the “sharp drop [in headline inflation] was mainly driven by oil prices, as core CPI inflation remained steady” and the expectations of low oil prices this year following the recent freefall in the price for oil means that downside risks to inflation are increasing. This ultimately makes it harder for the Central Bank to justify a potential rate hike this year.