Headline inflation is expected to decline for a fourth consecutive month in January, attributed to the government's support measures for diesel and electricity bills, as well as lower global oil prices.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said other key factors include the easing of the El Niño weather phenomenon and sales promotions to accommodate increased consumer spending for the government's Easy E-Receipt scheme.
However, Mr Poonpong said several factors may contribute to rising inflation, such as higher prices for tourism-related goods and services following the rapid recovery of that sector.
Another factor is ongoing geopolitical tensions such as the attacks on shipping vessels in the Red Sea that temporarily resulted in higher shipping fees and ocean freight charges, he said.
Given this backdrop, the Commerce Ministry projected headline inflation for 2024 in a range of -0.3% to 1.7%, with an average of 0.7%.
The projection is based on GDP growth of 2.7-3.7% this year, with crude oil prices ranging from US$80-90 per barrel and an exchange rate of 34-36 baht per US dollar.
The ministry reported yesterday headline inflation dropped for a third consecutive month in December, reaching its lowest level in 34 months, largely stemming from a decrease in the prices of energy (fuel and electricity) based on government support measures.
The prices of meat and food ingredients have also been consistently decreasing.
Headline inflation, gauged by the consumer price index, declined by 0.83% year-on-year in December, following a 0.44% dip in November, a 0.31% contraction in October and a 0.3% increase in September.
Core inflation, which excludes volatile food and energy prices, rose by 0.58% year-on-year in December.
For the full year, inflation rose 1.23% from 2022, within the target range set by the ministry, with core inflation at 1.27%.
"The decline in inflation for three consecutive months is attributed to government support measures to reduce the cost of living, particularly fuel prices and electricity tariffs," said Mr Poonpong.
"The prices of certain goods and services were also reduced, but this was limited to specific groups and not a widespread decrease in the prices of major goods and services. There is no indication of deflation yet."
Deflation is a condition when the prices of goods and services fall over a period of time as people spend less and delay their purchases in anticipation of lower prices, leading manufacturers to cut prices and earn less.
This leads to an economic slowdown, investors delay their investments and ultimately the money supply in the system declines.