Thailand's headline consumer price index (CPI) unexpectedly fell by 0.08% in March from a year earlier, following an annual fall of 0.88% in the previous month, but the Commerce ministry said on Tuesday that prices were expected to rise significantly in the second quarter of the year.
Despite the rise in global oil prices in March, retail prices in Thailand were curbed in the first half of the month. Electricity prices continued to fall, helping keep overall inflation low even though there were price increases in prepared food, beverages and some daily necessities, the ministry said.
The March reading was below a forecast rise of 0.20% in a Reuters poll and remained well below the Bank of Thailand's (BoT) target inflation range of 1% to 3%. The annual CPI dropped 0.54% in the first quarter and has fallen for 12 consecutive months.
Average inflation could rise to 3.67% in the second quarter if oil prices stayed high for two months and hit 5.78% if high oil prices lasted for three months, Nantapong Chiralerspong, head of the Trade Policy and Strategy Office, told a briefing.
The ministry now predicts headline inflation to be between 1.5% to 2.5% in 2026, he said, adding there were no signs of stagflation yet as investment and exports were still increasing.
The core CPI, which excludes volatile energy and fresh food prices, rose 0.57% in March from a year earlier.
Commuters increasingly turn to the Yellow Line BTS at Bang Kapi Station to cut fuel consumption amid soaring oil prices. (Photo: Varuth Hirunyatheb)
BoT Governor Vitai Ratanakorn said last week there was no need for a drastic monetary policy change for now, although inflation could reach 3% this year.
The central bank unexpectedly cut its key rate in February to support Southeast Asia's second-largest economy. The next policy review is on April 29.
The government is planning an oil tax cut, a borrowing guarantee for an oil subsidy fund and other support measures, to mitigate the impact of rising oil prices.
Prime Minister Anutin Charnvirakul said on Tuesday the government is also rolling out energy conservation measures, including tighter control of fuel use, while restructuring fuel and electricity prices to lower household energy costs.
