Thailand's inflation rate may be as low as -1% this year as the escalating spread of Covid-19 has weakened overall domestic demand.
Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office, the planning unit of the Commerce Ministry, said a -1% inflation rate would be Thailand's lowest ever.
The inflation rate was -0.9% in 2009 due to the impact of the US subprime mortgage crisis and in 2015 owing to the oil price crisis.
"The decreased inflation forecast stems primarily from weak demand because of the Covid-19 impact. The virus is preventing people from running businesses or working jobs," Ms Pimchanok said.
The department yesterday officially downgraded its 2020 headline inflation forecast from 0.4-1.2% (0.8% average) to a range of -1.0% to -0.2% (-0.6% average).
The forecast assumes GDP would contract by 4.8% to 5.8%, crude oil prices averaging US$35-45 per barrel, and an exchange rate of 30.5-32.5 baht per US dollar.
In a related development, the ministry reported the consumer price index (CPI), which gauges headline inflation, fell 0.54% year-on-year in March, the first contraction in 33 months.
The coronavirus outbreak and a continuous decline in energy prices were key contributors to lower prices, she said.
Ms Pimchanok said non-food and beverage prices fell by 1.7% from March last year, mainly from a sharp drop in transport and communication prices.
Food and non-alcoholic beverage prices rose by 1.6% year-on-year thanks to increases for most goods except fresh vegetables, which saw a 5.4% decline on accelerated production and lower demand.
Prices of rice, flour and flour products rose 7.7%, while those of meats, poultry and fish were up 1.8%, fresh fruit 2.3%, eggs and dairy products 2.5%, and seasonings and condiments 2.8%.
The index for non-alcoholic beverages rose 2.3%, with food at home and food away from home up 0.76% and 0.41%, respectively.
On a monthly basis, consumer prices fell 0.86% from February.
Core CPI, which excludes raw food and energy prices, rose 0.54% year-on-year in March and dipped by 0.02% month-on-month from February.
Headline inflation was 0.41% for the first quarter, while core inflation was 0.53% compared with the same period last year.
Ms Pimchanok said drought affecting agricultural supply seemed limited and less influential than the effects of falling demand from the pandemic.