Inflation dips again for second month

Inflation dips again for second month

Headline inflation declined for a second consecutive month in November, reaching its lowest level in 33 months, largely attributed to lower energy prices, particularly for diesel and gasohol 91 following the government's provision of support measures.

The prices of pork, fresh chicken and vegetable oil also fell when compared with November 2022.

The Commerce Ministry reported yesterday headline inflation, gauged by the consumer price index, decreased by 0.44% year-on-year in November, following a 0.31% contraction in October and a 0.3% increase in September.

Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said the government's support measures played a key role in the decrease in prices of electricity, diesel and gasohol 91, along with the drop in fares on electric trains.

The prices of detergent, fabric softener, TVs, washing machines and air conditioners also continued to decrease.

The prices of some fresh food items fell for a third consecutive month, especially pork and fresh chicken, which was attributed to high inventories, while vegetable oil, seasonings and tamarind were also cheaper.

"The inflation reading for November, which marked a second consecutive monthly decline, does not signal any concerns. There's no need to worry about deflation," said Mr Poonpong, who added the lower prices were largely because of government measures, particularly for oil and electricity.

He said Thailand's economic conditions are expected to continue improving, with the National Economic and Social Development Council forecasting 2.5% economic growth this year and 2.7-3.7% growth in 2024.

Core inflation, which excludes volatile food and energy prices, rose by 0.06% year-on-year in November, compared with a 0.08% gain in October.

For the first 11 months of this year, headline inflation was 1.41% year-on-year, within the target set by the Finance Ministry and the central bank's Monetary Policy Committee of 1.0-3.0%. Core inflation averaged 1.33% during the period.

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%.

Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce, said the drop in headline inflation in November reflects lower energy and electricity prices because of government support measures.

However, he noted an unusual situation regarding lower prices for some fresh foods and consumer products, with core inflation remaining below 1%.

These figures reflect Thailand's fragile economy, while consumer spending trends indicate the public is still concerned and being cautious about outlays, said Mr Thanavath.

This could signal the beginning of a deflationary phase, and policies such as lowering interest rates may be required, indicating a potential urgent need for economic stimulus, he said.

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