Thai Jun 22 inflation near 14-year high as rate hike looms

  • Thailand’s headline inflation outstripped forecasts to hit a near 14-year high in Jun 22, reinforcing expectations of an interest rate hike as early as Aug 22, and with the commerce ministry warning price pressures will extend into the 3Q22.
  • The headline consumer price index (CPI) rose 7.66% y/y, driven up by higher energy prices and also affected by base effects, the ministry said on 5 Jul 22.
  • The figure beat a forecast 7.50% rise in a Reuters poll and compared with May 22’s 7.10% rise.
  • The CPI in 3Q22 is expected to rise at a similar pace as 2Q22’s 6.46%, ministry official Ronnarong Phoolpipat told a news conference.
  • Consumer prices, however, should fall sharply in the 4Q22 due to 2021’s high comparative figures, he said.
  • While the pace of inflation was difficult to predict due to various factors including a weak baht, the ministry was maintaining its forecast for average headline inflation of 4.5% in 2021. In 2008, inflation was 5.5%.
  • The Bank of Thailand, however, expects headline inflation of 6.2% for 2022, above its target range of 1% to 3%.
  • The central bank is widely expected to hike its policy rate from a record low of 0.50% at its next meeting on 10 Aug 22 to contain rising inflation.
  • The core CPI index, which strips out energy and fresh food prices, rose 2.51% y/y, also beating a forecast 2.37% rise, and compared with May 22’s 2.28% increase.

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