Thai Headline Inflation in February 2012 decelerated, YoY, but gained, MoM from rising prices of food/ beverages and others. Increases in production and transportation costs amid higher domestic fuel prices (from global oil prices and domestic Oil Fund levies) have spurred consumer goods prices during the month.
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Headline Inflation rose 0.37 percent MoM and 3.35 percent YoY in February, against 3.38 percent YoY in January.
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Core Inflation rose 0.11 percent MoM and 2.72 percent YoY in February, against 2.75 percent YoY in January.
As inflation-related issues have taken the expected course, the KResearch outlook toward inflation remains unchanged. We expect that 1H12 inflation should increase slightly due to the base. The average of inflation may ease to 3.3-3.4 percent, with a possibility of rising to over 4.0 percent in 2H12 given pass-through effects of higher producer costs into consumer prices.
KResearch also expects that Headline Inflation will average 3.9 percent in 2012 (ranging between 3.5-4.5 percent). Meanwhile, Core Inflation should average 3.0 percent in 2012 (ranging between 2.6-3.6 percent), higher than what was seen in 2011. Core Inflation may nearly reach the upper range of the current BOT Inflation Targeting framework of 0.5-3.0 percent in 2H12 that inflationary pressure may increases in line with growth momentum, thus possibly influencing the BOT's monetary stance later on.
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