The consumer price index (CPI), a gauge of headline inflation, shrank 0.08% year-on-year in March, the lowest contraction rate in 13 months, following the rise of global oil prices and gradual economic recovery.
March's CPI fared better than February's which saw a drop of 1.17%, buoyed by rising demand for domestic and global fuel as well as cooking oil, said Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office.
Pork prices also climbed as farms provided African swine vaccines to their livestock, which increased their costs.
Core CPI in March, which excludes raw food and energy prices, rose 0.09% year-on-year and increased 0.03% monthly.
In the first quarter, the headline inflation declined 0.53% year-on-year while core inflation was up 0.12%.
Mr Wichanun said the lowest contraction rate of CPI in March was supported by a 1.35% rise for energy products -- the first increase over the past 14 months.
"The slight contraction also showed signs of improving demand and gradual economic recovery," he said.
Mr Wichanun said there has been an improvement in farm product prices, vehicle sales and real estate transactions.
Based on the index of food and non-alcoholic beverages, rice, flour and flour products saw a dip of 6.59% year-on-year while eggs and dairy products fell 0.9%. The meat index was up 1.76% and fresh fruits up 0.01%.
The index of non-food or beverages increased 0.04% with the transport and communication sector showing a 5.43% growth.
He said the inflation in the second quarter is likely to increase from the improved Covid-19 situation, higher global oil prices and the government's assistance measures.
Throughout this year, the headline inflation is projected to rise 0.7-1.7%, which Mr Wichanun said is appropriate to support the country's economic growth this year.
However, Thanavath Phonvichai, the president of the University of Thai Chamber of Commerce, said the contraction in CPI suggests that the country's economic slowdown is still continuing.
There are still no clear signs of an economic recovery as domestic purchasing power has not yet picked up, Mr Thanavath said. More economic assessment is needed after the Songkran festival to see prospects for the economy in the second quarter, he said.