BANGKOK: Thailand’s annual inflation rate was negative for a fourth straight month in July, driven by price drops in energy and some agricultural goods, but the commerce ministry said on Wednesday that the economy was not suffering from deflation.
The consumer price index dropped 0.7% in July from a year earlier, deeper than the 0.40% decline forecast in a Reuters poll, and followed a 0.25% drop in June.
It was the fifth month in a row that the inflation rate was below the central bank’s target range of 1.0% to 3.0%.
“The deeper fall was driven by two main factors - energy prices like gasoline, diesel and electricity prices, while the other was fresh produce,” Poonpong Naiyanapakorn, head of the ministry’s Trade Policy and Strategy Office, told a news conference.
The August rate is expected to be similar to July, he said, with the CPI seen down an annual 0.5% in the third quarter.
Despite the run of negative readings, the ministry said there were no signs of deflation.
“On deflation, we must look at demand. The negative inflation rate has been driven by factors that are not demand-related but rather by the price of oil, energy, fruits and vegetables,” Poonpong said.
“Core inflation remains elevated and has consistently risen,” he added.
The core CPI, which excludes volatile fresh food and energy prices, rose 0.84% in July from a year earlier, compared with a forecast increase of 0.90%.
When asked whether the price readings would affect the central bank’s upcoming review of interest rates, Poonpong said inflation was only one aspect that was considered and potential deflation required an examination of demand.
The Bank of Thailand’s next review is on August 13. In June, the central bank left its key interest rate unchanged at 1.75%, seeking to save some policy ammunition to support growth if needed
In the first seven months of 2025, annual headline inflation averaged 0.21%, with core inflation at 0.95%, the ministry said.
The ministry maintained its headline inflation forecast for 2025 at 0.0% to 1.0%.
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