The consumer price index (CPI), a gauge of headline inflation, dropped 0.98% year-on-year in July, the fifth straight month of decline.
But the rate slowed down from a 1.57% fall in June, 3.44% dip in May — the biggest in nearly 11 years — 2.99% fall in April and 0.54% drop in March, which was the first contraction in 33 months.
Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office, said major contributors to the July figures were a slower contraction of energy prices and the first rise in raw food prices in three months as domestic demand spiked with students going back to school, a recovery of economic activities, and a pig pandemic in neighbouring countries.
The termination of subsidised utility bills and a decrease in promotional activities also played a part in the drop.
According to the Commerce Ministry, inflation for items except food and energy (core inflation) was 0.39% year-on-year in July. For the first seven months of 2020, average headline inflation was -1.11% and core inflation was 0.34%.
“With the easing of the Covid-19 situation, government measures to promote domestic tourism and stable energy prices, we expect a better inflation rate for this month,” said Ms Pimchanok.
“However, a second wave of the coronavirus, fluctuating energy prices, and the global economic situation are risk factors that warrant close monitoring.”
In July, the Commerce Ministry downgraded its annual headline inflation forecast to a range of -0.7% to -1.5%, with an average of -1.1%, from a range of -0.2% to -1.0%, an average of -0.6%, after the rate dropped for the fourth month in a row in June.
The forecast assumes GDP will contract by 7.6%-8.6% this year, with Dubai crude oil prices averaging US$35-45 a barrel and an exchange rate of 30.50-32.50 baht to the US dollar.
Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce, said the CPI’s drop at a slower pace is in line with the economic trend which is likely to bottom out in the second quarter.