• Thailand's headline inflation accelerated to 0.95%YoY in November 2024, marking a 3-month high, while core inflation accelerated to 0.80%YoY in November 2024. The increase was driven by higher energy and retail diesel prices due to the low comparison base of November 2023, which resulted from the government’s measures to alleviate the cost of living, coupled with the increase in prices of some food and beverages. • The average inflation rate for 2024 is expected to stay almost on par with our prior estimate of 0.5%. The inflation rate for December 2024 is projected to steadily accelerate due to the low base effect of energy prices and retail diesel prices in 4Q-2023, resulting from the government’s measures to alleviate the cost of living. In addition, the floods in Southern Thailand may affect the prices of fresh food and retail oil in the region. Meanwhile, the prices of goods and services are expected to be partially supported by tourism during the high season.• KResearch is of the view that the average headline inflation rate for 2025 may increase slightly to approximately 0.7% due to the following:1. The government is expected to keep domestic energy prices almost unchanged from current levels amid the high debt burdens of the Oil Fund and the Electricity Generating Authority of Thailand (EGAT), although global crude oil prices are likely to decline further.
2. Fresh food prices are projected to rise in line with the gradual increase of pork prices in 4Q-2024 after falling low during the first three quarters of 2024.
• However, the inflation risk remains high in 2025 due to potential government measures, especially if the value-added tax (VAT) is increased from 7% to 10%, which would raise the proportion of the VAT in the inflation basket by 1.8%.
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