Thailand’s 2024 inflation target approved: 1% to 3% range maintained

The Bank of Thailand’s (BoT) headline inflation target range for the year 2024 has been given the green light by the cabinet. The approved target, set between 1% and 3%, remains unaltered from the current year, as reported by Deputy Finance Minister Julapun Amornvivat yesterday. This target, which serves as a guiding beacon for monetary policy, is subjected to an annual review.

Notably, a decline was observed in headline inflation for two consecutive months, as reported by the Commerce Ministry earlier this month. The data revealed that it had dipped to the lowest in the past 33 months by November, reported Bangkok Post.

In related news, Thailand faces a significant economic challenge as inflation hits a 33-month low in November, marking the second consecutive month of decline. The Consumer Price Index dropped to -0.44% year-on-year, sparking concerns about potential deflation and an economic slowdown. Government interventions, particularly measures to reduce fuel and electricity prices, contributed to this downward trend, constituting around 13.7% of the inflation calculation.

Despite these alarming figures, Poonpong Naiyanapakorn, the director-general of the Trade Policy and Strategy Office, remains optimistic about Thailand’s economic health. He highlights the country’s GDP growth of 1.5% year-on-year in the third quarter, maintaining a positive trajectory since the fourth quarter of 2021. Private consumption also demonstrated resilience, expanding by 8.1% year-on-year, and the unemployment rate hit a 15-quarter low at 0.99%.

However, Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center, urges caution against interpreting the recent inflation decline as a precursor to deflation. She attributes the dip to government subsidies, particularly in electricity prices. Despite the disagreement on the current economic state, there’s consensus on the projection of continued inflation deceleration. Government efforts to alleviate living costs, especially regarding fuel and electricity prices, are expected to influence inflation rates in the upcoming months. Several risk factors, including geopolitical conflicts and shifts in the baht, could further impact Thailand’s economic landscape.