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Economist at UOB Group Barnabas Gan assessed the latest inflation figures in Thailand.

Key Quotes

“Thailand’s consumer prices contracted 0.54% y/y (-0.86% m/m nsa) in March 2020, marking the deepest deflation print since December 2015. Core prices also decelerated to +0.54% y/y in March 2020, down from February’s +0.58% y/y. Accounting for the latest data, Thailand’s consumer prices rose by a tepid 0.41% in the first three months of 2020, the slowest pace since 1Q16.”

“Slower economic momentum seen from COVID-19 concerns was likely the key factor that dragged Thailand’s inflation environment.”

“The fall in global oil prices has also depressed transport costs in Thailand, specifically the fuel component.”

The Bank of Thailand now predicts headline inflation rate to be -1.0% in 2020, compared with its target range of 1% – 3%.”

“Coupled with deflation risks in Thailand, the slowing economic momentum given COVID-19 concerns should pressure policy-makers to make further interest rate cuts into 2020.”