Thailand’s core inflation has contracted for the first time in more than a decade in June, the Trade Policy and Strategy Office said on Friday.
The headline was at -1.57 per cent in June compared to -3.44 per cent in May.
Excluding oil and food prices, the core inflation has declined by 0.05 per cent, the first contraction in ten years and eight months.
Pimchanok Vonkorpon, the office’s director-general, said the inflation rates were affected by the government’s measures to help households via discounts on utility bills.
At the same time, oil and fresh food prices in 2020 are comparatively lower than they were in 2019 with fewer expenditures in services and tourism because of the coronavirus outbreak.
For the first six months, headline inflation declined by an average of 1.13 per cent while core inflation rose by 0.32 per cent.
Pimchanok said the inflation target range for 2020 will now be set at -0.7 per cent to -1.5 per cent compared to the previous range of -0.2 per cent and -1 per cent.
The last time such a rate was seen was in 2009 – the year after the Global Financial Crisis when Thailand’s headline inflation was at -0.9 per cent.
The new inflation target range is based on the expectation that the economy will contract by 7.6-8.6 per cent with oil prices of around US$34-$35 per barrel and the baht trading at around 30.5-32.5 per greenback in 2020.
Pimchanok said factors that could affect the new target in the second half of 2020 include the outbreak situation, lockdown easing measures, the reopening of businesses, and the deals between the Organization of the Petroleum Exporting Countries.
