Headline inflation declined for the first time in 25 months in October, largely attributed to lower energy prices and several government support measures.
The Commerce Ministry reported on Monday headline inflation, gauged by the consumer price index, decreased by 0.31% year-on-year in October, compared with a 0.3% year-on-year uptick in September.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said the decrease was largely influenced by the decline in the prices of energy and consumer goods related to government measures aimed at reducing the cost of living.
In addition, the prices of pork and fresh vegetables were lower than last year.
According to ministry data, the category of food and non-alcoholic beverages decreased by 0.65% year-on-year in October, attributed to a drop in the price of meat, particularly pork and chicken, along with fresh vegetables (coriander, Chinese kale and cucumbers) influenced by favourable weather conditions the past year.
The prices of vegetable oil, dried coconuts and tamarind paste also declined based on cheaper raw material costs.
In the non-food and beverages category, prices fell by 0.09% from October 2022, driven by lower rates for electricity and diesel because of state initiatives, as well as cheaper cleaning products (laundry detergent, dishwashing liquid and fabric softener) and electrical appliances (fans, air conditioners and washing machines).
"The inflation reading for October, which marked the first drop in 25 months, does not signal any concerns. There's no need to worry because this decrease was attributed to significant reductions in essential product categories such as energy and goods, which fell based on government support measures to reduce the cost of living," said Mr Poonpong.
"Both the tourism sector and exports continue to post solid recoveries, while the country's economic forecast remains positive. There's no need to worry about possible deflation."
Core inflation, which excludes volatile food and energy prices, rose by 0.08% year-on-year in October, compared with a 0.63% gain in September.
For the first 10 months of this year, headline inflation was 1.6% year-on-year, moving within the inflation target range set by the Finance Ministry and the Monetary Policy Committee of 1-3%, while core inflation averaged 1.41% during this period.
"Headline inflation in November is expected to decrease slightly year-on-year, mainly because of projected price reductions in the food category [meat and seasonings] and energy [electricity and fuel]," he said.
"In addition, other essential consumer products for daily use should see price reductions because of the government's support measures and reduced production costs. The price base in November 2022 was relatively high, contributing to the expected downward trend in headline inflation in November."
However, Mr Poonpong said increasing domestic demand, driven by tourism, exports, and the rising prices of important agricultural products such as rice, cassava and rubber, along with a tight energy supply caused by restrictions from major oil producers, could disrupt inflation expectations.
Another factor is geopolitical tensions and war, which may affect the prices of certain goods, he said.
The Commerce Ministry is maintaining its forecast for headline inflation this year, predicting a range of 1-1.7%, with an average of 1.35%.