Deflation took stronger hold in February with the headline rate hitting its lowest mark in 65 months, fuelled by lower prices of oil and consumer goods, the Commerce Ministry said.
Ministry inspector-general Somkiat Triratpan said headline inflation fell 0.52% year-on-year in February but rose 0.12% from the previous month. The consumer price index dropped for the second consecutive month this year to 106.15.
The ministry predicted that inflation for the year would end up between 0.6% and 1.3% instead of the earlier prediction of 1.8% to 2.5%, he said.
Cumulative inflation in the first two months of this year was -0.47% year-on-year.
The prices of goods excluding food and beverages fell by 1.7% as oil prices dropped by 20.9%. Food and non-alcoholic beverages increased by 1.7% year-on-year.
Mr Somkiat said that inflation could be -0.4% in the first quarter of this year due to the lower global oil prices, a reduction in electricity fees in January and government measures to control consumer prices.
Inflation will begin to rise as the year progresses, especially in the last quarter of this year when oil consumption usually increases, he said.
The Ministry of Commerce is basing its annual inflation target on Dubai crude-oil prices of between $50-$60 a barrel, an exchange rate of 32-35 baht to the US dollar, and a 3%-4% expansion in the Thai economy.