By Orathai Sriring and Kitiphong Thaichareon
BANGKOK (Reuters) – Thailand’s annual headline inflation unexpectedly rose in June but at its slowest pace in 22 months, and the commerce ministry on Wednesday lowered its forecast for consumer price rises for the whole year.
The headline consumer price index (CPI) increased 0.23% in June from a year earlier, compared with a forecast fall of 0.1% in a Reuters poll, and against May’s 0.53% year-on-year rise.
The slower headline pace was due to lower food and energy prices and a high base last year, which should continue to help hold down consumer prices, the ministry said.
It was the second straight month that headline CPI dropped below the central bank’s target range of 1% to 3%.
Despite falling inflation, Thailand’s central bank is expected to raise rates further at its next meeting on Aug 2, as the economy continues to recover, said Payong Srivanich, chairman of the Thai Bankers’ Association.
“Now the market has already priced in a further hike of 25 basis points,” he told Reuters.
“If rates are not raised further and inflation is back and out of control, it’ll have an adverse impact,” he added.
The Bank of Thailand (BOT) has raised its key rate by a total of 150 basis points since August to 2% to curb inflation. It earlier said core inflation remained elevated.
In June, the core CPI was up 1.32% from a year earlier, compared with a forecast for a 1.4% rise in the poll, and against May’s 1.55% increase.
“Compared with other countries, Thailand has very low inflation,” ministry official Wichanun Niwatjinda told a briefing.
The ministry predicts the headline CPI will rise 0.77% year-on-year in the third quarter and 0.62% in the final quarter of the year, he said.
“That means full-year inflation will be at 1% to 2%,” he said, adding that was down from the 1.7% to 2.7% projected previously.
In January-June, annual headline inflation was 2.49% and the core rate was at 1.87%.
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Kanupriya Kapoor)
