Headline inflation is projected to rise in April for the first time in over a year, or since March 2025, while the consumer confidence index (CCI) fell sharply in March. Both are largely influenced by the Middle East conflict and rising energy prices, according to the Trade Policy and Strategy Office (TPSO).
In March, the consumer price index (CPI) fell by 0.08% year-on-year to 100.27, reflecting a slower pace of decline.
The TPSO explained that the slower decline resulted from fuel price caps during the first half of March and a reduction in electricity fees. Most goods prices remained unchanged due to existing inventories.
Nantapong Chiralerspong, director-general of the TPSO, said headline inflation is expected to rebound significantly into positive territory in the second quarter.
Rising domestic retail fuel prices and higher costs for agricultural products such as fresh vegetables, chicken eggs, chicken meat, pork, and airfares are driving inflation. Large businesses are also signalling price hikes for consumer goods to reflect rising raw material and logistics costs.
The Commerce Ministry revised its headline inflation projection for the year from 0.0%-1.0%, with a midpoint of 0.5%, to 1.5-2.5%, with a midpoint of 2%.
Mr Nantapong outlined two possible scenarios for full-year headline inflation.
In the first scenario, Dubai crude oil averages US$120 in April-May before falling to $70 for the remainder of the year. Diesel retail prices are expected to drop from 44.24 baht per litre in April-May to 32.25 baht per litre for the rest of the year. Under this situation, headline inflation is projected at 1.5-2.5%.
In the second scenario, Dubai crude oil remains at $120 per barrel in April-June, then drops to $80. Diesel prices would decrease from 44.24 baht per litre in April-June to 34 baht for the rest of the year. This would push headline inflation to 2.5-3.5%.
Regarding concerns about stagflation, Mr Nantapong said the TPSO is closely monitoring the situation. While inflation is expected to rise, other economic indicators, including investment and exports, remain positive.
"We have to see how the new government's stimulus initiatives will support the economy," he said.
Meanwhile, the CCI fell sharply from 53 in February to 45.5 in March due to the ongoing war in the Middle East, which has significantly driven fuel prices and living costs.
This is the first time in six months that the index dropped below 50, reflecting consumers' lack of confidence.
