Consumer prices fell for the third consecutive month in March to a 66-month low due mainly to weak global oil prices.
But authorities remain adamant Thailand has yet to enter deflationary territory, as its economic fundamentals remain strong.
"Deflation is a condition in which the prices of goods and services fall for six months in a row while people are not spending, leading manufacturers to cut prices," Commerce Ministry inspector-general Somkiat Triratpan said.
"Thailand's inflation decline is due mainly to falling oil prices, but we expect global oil prices to rise later this year, driven by higher and strong demand during the cool season, propping up inflation accordingly."
On Wednesday, the ministry reported consumer prices based on 450 products and services shrank by 0.57% year-on-year last month, slightly steeper than the 0.52% fall in February.
On a month-on-month basis, headline inflation increased by 0.17% from February.
In the first three months of this year, consumer prices fell by 0.5% year-on-year due mainly to a decline in non-food items and beverages, which dropped by 1.7%.
However, prices of food and non-alcoholic beverages rose by 1.77%, driven mainly by meat, poultry and fish, seasonings and condiments, prepared foods, and eggs and dairy products.
Core inflation, which excludes volatile food and energy, edged up 1.31% year-on-year last month but dropped by 0.06% month-on-month.
For the first three months, core inflation rose by 1.47% from the same period last year.
The ministry last month cut its inflation projection to a range of 0.6% to 1.3% from an earlier forecast of 1.8% to 2.5%, based on oil prices of US$50-60 a barrel, an exchange rate of 32-34 baht to the US dollar and GDP growth of 3-4%.
Don Nakornthab, the Bank of Thailand's director of macroeconomic policy, said the March inflation figures were in line with the central bank's estimate and not a sign of deflation.
The contraction in headline inflation could be attributed to the slow economic recovery and the low oil price.
The central bank forecast that headline inflation would continue to fall in the first half before increasing in the second half on anticipation of a rebound in crude oil prices, Mr Don said.
Benjarong Suwankiri, head of TMB Analytics, said consumer prices were expected to see a gradual fall over the next six months due mainly to the oil factor. He projects inflation will start recovering in the third quarter and average 0.5% to 1% for the year.