Thailand's inflation turned negative for the first time in more than a year on cheaper fuel prices and increased fresh food supplies, creating more room for the central bank to cut rates further to deal with the impact of the trade war.
The consumer price index fell 0.22% in April, the first negative print since March last year, according to data released by the Commerce Ministry on Tuesday. That was more than analysts' expectation for a 0.1% decline.
Core inflation, which strips out volatile fuel and fresh food prices, rose 0.98% in April, beating economists' forecast for a 0.9% gain. Consumer prices declined 0.21% month-on-month, the third straight month of negative readings.
Benign inflation may help the Bank of Thailand (BoT) add to its three rate cuts since October as Southeast Asia’s second-largest economy braces for a hit to growth from a 36% tariff threatened on its exports to the United States. The central bank has hinted at more easing if needed to contain the fallout of the trade war that is roiling the global economy.
The BoT has cut its forecast for gross domestic product (GDP) growth this year to a range of 1.3% and 2% from its December estimate of 2.9%, tied to two possible scenarios on how US tariff negotiations go.
The Monetary Policy Committee (MPC) has also slashed the headline inflation forecast to a range of 0.2% and 0.5%, citing a decline in global crude oil prices and government subsidies to alleviate costs of living and business expenses. It has averaged 0.75% in the first four months of the year, according to the Commerce Ministry.
The central bank's official inflation target for this year is set at a range of 1% and 3%.
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