Thailand's Headline inflation for May 2013 fell to 2.27 percent YoY, being the lowest level in 42 months, with Core inflation also declining steadily to 0.94 percent YoY, its lowest in 29 months.
However, the May Consumer Price Index (CPI) edged up 0.24 percent MoM, being the highest over-month increase this year, reflecting the sixth consecutive monthly increase in the cost of living. Lower fresh food outputs as a result of erratic weather conditions, along with rising production costs, were responsible for substantial increases in certain food categories, e.g., fresh vegetables and fruit (up 4.39 percent MoM), as well as eggs (up 8.79 percent MoM). Prices of poultry and seafood also increased, as did garments given the advent of the new school year.
Despite lower domestic retail fuel prices (down 0.35 percent MoM) in line with the global crude oil prices and lower electricity fees (down 1.24 percent MoM) due to a reduction in electric power fuel tariff (Ft) for May-August that helped ease inflationary pressure somewhat, the May CPI rose 0.24 percent MoM, beating the 0.16 percent MoM increase in April.
Regarding the inflation outlook for the entire year, we at KResearch maintain our current projection for Headline inflation at 2.6 percent, or within 2.4-3.0 percent, and Core inflation at 1.4 percent, or within1.2-1.7 percent. We have also assessed that inflationary pressure will remain benign until the end of 3Q13, before edging up toward the end of the year.
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