Inflation turned positive in April 2024 and is expected to trend upwards for the rest of this year, making policy rate cuts less likely (Business Brief No.4059)

• Thailand's headline inflation in April 2024 stood at 0.19 percent YoY, rising by 0.85 percent MoM, for the first positive reading in seven months. This uptick was mainly driven by higher energy prices in line with the global trend, and rising agricultural product prices. However, inflationary pressure from domestic demand remained subdued.
• Inflation is expected to return to the Bank of Thailand's target range of 1-3 percent for the remaining quarters of this year. Meanwhile, the Monetary Policy Committee (MPC) is likely to give more weight to financial stability risks and concerns over the Baht’s volatility amid pressure from prolonged monetary policy tightening by many central banks worldwide. As a result, the MPC is expected to hold its policy rate steady at 2.50 percent throughout 2024.
• KResearch anticipates that Thailand’s headline inflation will remain on an upward trend. We maintain our projection for full-year 2024 headline inflation at 0.8 percent YoY. This outlook is based on expectations that global crude oil prices will remain elevated, prompting the government to gradually reduce domestic energy subsidies. Meanwhile, the prices of fresh vegetables and fruits are likely to stay high due to drought conditions caused by extreme heat and scarce rainfall. Additionally, if the daily minimum wage is raised to THB 400 nationwide from October of this year as proposed by the government, such a move would add to the country’s headline inflation by around 0.1 percent this year.