Inflation expectations crash to 0% as BoT denies deflation

The Bank of Thailand claims it has not observed deflation in the Thai economy, even as it lowered its inflation forecast for this year to 0%, driven by declines in energy and fresh food prices.

- SOMRUEDI BANCHONGDUANG NAREERAT WIRIYAPONG

Speaking after the Monetary Policy Committee's (MPC) meeting yesterday, committee secretary Sakkapop Panyanukul said the Thai economy shows no indication of entering a deflationary phase. He said deflationary risks remain low as most goods and services continue to see stable or rising prices.

“Price increases have not been broad-based, occurring mainly in energy and raw food items. Despite tighter financial conditions in the business sector due to slower bank loan growth, there are still no signs of deflationary risk,” he said.

Mr Sakkapop said the central bank will continue to monitor goods and services prices to assess potential deflation risks going forward.

The MPC lowered its headline inflation forecast yesterday to 0% for 2025, down from a previous outlook of 0.5%, and expects inflation of 0.5% in 2026. The inflation rate is projected to gradually return to the target range of 1-3% by early 2027.

The lower inflation outlook is mainly driven by supply-side factors, including falling global crude oil prices, government measures to reduce domestic retail fuel prices, and lower raw food prices following favourable weather conditions that increased supply, he said.