Thailand’s Inflation Comes Back on Track as CPI Stabilizes

Thailand's inflation rate returned to the central bank's target range in December for the first time since May of the previous year, driven by rising energy and food prices, according to the commerce ministry. The core CPI, which excludes volatile food and energy prices, rose by 0.79% in December from a year earlier, just under the expected 0.81% increase. For 2024, average annual headline inflation was 0.40%, with core inflation at 0.56%, reflecting subdued price pressures throughout the year.

Looking ahead, headline inflation in January is expected to hover around 1.25% and remain above 1% during the first quarter of 2025, according to Poonpong Naiyanapakorn, director of the trade policy and strategy office. The ministry has maintained its inflation forecast for 2025 at a range of 0.3% to 1.3%, citing anticipated stronger economic growth and government stimulus measures as key factors.

The headline consumer price index (CPI) increased by 1.23% year-on-year in December, within the central bank's target range of 1% to 3%. This marked an acceleration from November's annual increase of 0.95%, although it was slightly below the 1.47% rise forecast in a Reuters poll.

Finance Minister Pichai Chunhavajira recently emphasized the need for the Bank of Thailand to guide inflation toward the midpoint of the target range while ensuring the baht remains competitive. On December 18, the central bank left its key interest rate unchanged at 2.25%, following a surprise rate cut in October. The central bank has projected headline inflation to reach 1.1% in 2025, with its next rate review scheduled for February 26.

The inflation outlook reflects a balancing act between supporting economic growth and managing price stability as Thailand navigates global and domestic challenges.