Headline inflation in the third quarter is expected to be low, similar to the previous quarter, while it is likely to increase to 1% in the fourth quarter, aligning with the inflation target for the full year.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said the consumer price index (CPI) last month increased at a slower rate of 0.62% year-on-year, attributed to the low base price of electricity ending last month.
Moreover, the prices of fresh food decreased as weather conditions became favourable for cultivation following the end of the hot season.
Other goods and services did not have a significant impact on inflation.
The CPI in June compared with May decreased by 0.31% month-on-month, largely attributed to a decrease in the food and non-alcoholic beverages category by 0.67%.
Prices fell for fresh items such as green brinjal, long bean, lime, cucumber, Chinese broccoli, cilantro, water spinach, cabbage, pork, short mackerel, vegetable oil as well as delivered food.
Core inflation (excluding fresh food and energy) increased by 0.36% year-on-year, similar to the level in May, with the figure for the first half of the year averaging 0.41%.
For the third quarter, the office predicts headline inflation to be at a low level, similar to the second quarter, for many reasons.
First, the price of electricity is lower than last year as government subsidies expired.
Second, weather conditions became more favourable for cultivation following the end of the hot season, increasing yields and adjusting prices of agricultural products to normal levels.
Third, the intense competition among large-scale wholesale and retail traders, along with the growth of e-commerce, has induced trade promotion activities, particularly ongoing price reductions.
"In the third quarter, inflation is expected to be at a low level of 0.78%, similar to the previous quarter, and is likely to increase to 1% in the fourth quarter as inflation was negative for many consecutive months last year," said Mr Poonpong.
However, he said some factors could contribute to a higher inflation rate.
For instance, the newly adjusted price ceiling of diesel at 33.00 baht per litre is higher than the same period last year.
The exchange rate is also on a depreciation trend, falling lower than the same period last year.
Lastly, uncertainty from the impact of geopolitical tensions may lead to higher oil and freight prices, which raise import costs, said Mr Poonpong.
The Commerce Ministry predicts headline inflation this year will fall within a range of 0% and 1.0% (averaging 0.5%), aligning with economic circumstances.
