BANGKOK – Thailand’s inflation rate turned negative for the first time in more than a year in April, data showed on Tuesday, and the commerce ministry said while there was no deflation it would lower its inflation forecast for this year.
The headline consumer price index dropped by 0.22 percent in April from 12 months earlier, largely due to lower energy prices, the ministry said.
It was the first negative annual reading since March 2024, and compared with March’s headline inflation rate of 0.84 percent and a forecast in a Reuters poll of no change in the CPI. The central bank has a target range of 1 percent to 3 percent for inflation this year.
The core CPI, which excludes volatile food and energy prices, rose 0.98 percent in April from a year earlier, versus a forecast rise of 0.89 percent.
Poonpong Naiyanapakorn, head of the ministry’s Trade Policy and Strategy Office, said the positive core inflation showed there was no deflation, but also said the headline rate in May was expected to be similar to April.
The ministry said it would reduce its 2025 headline inflation forecast range of 0.3 percent to 1.3 percent, but did not give new figures.
In the January-April period, the headline inflation rate averaged 0.75 percent, with the core rate at 0.91 percent.
Last week, the central bank cut its key interest rate for a second straight meeting and lowered its growth and inflation forecasts for 2025.
BOT Deputy Governor Piti Disyatat told Reuters on Friday the central bank was ready to ease again, if needed, to support Southeast Asia’s second-largest economy through the global trade war. He said low inflation was not a reflection of weak domestic demand or deflation. The next policy meeting is on June 25.
Thailand’s central bank cut its key interest rate by a quarter point for a second consecutive meeting, as expected, seeking to support the underperforming economy which is facing fresh pressure from steep US tariffs.
The Bank of Thailand’s monetary policy committee voted 5-2 to reduce the one-day repurchase rate by 25 basis points to 1.75 percent, the lowest level in two years. That followed a similar reduction at the previous meeting in February.
The central bank cut its growth forecast for 2025 to 2.0 percent, based on prolonged trade negotiations and U.S. tariffs remaining close to current rates, from just above 2.5 percent seen in February and 2.9 percent predicted in December.
It said there were risks to growth and US tariffs could weigh more heavily in the second half of the year, and if the trade war escalates and tariffs are set at higher rates then growth could be just 1.3 percent this year.
Thailand is among Southeast Asian nations hardest hit by US President Donald Trump’s measures, facing a much larger-than-expected 36 percent tariff if a reduction can’t be negotiated before a US moratorium expires in July.
Growth next year was seen at 1.8 percent in the central bank’s baseline scenario and 1 percent in a worse case scenario.
“US trade policies and potential retaliations from major economies will cause significant changes in the global economic, financial, and trade landscape,” it said in a statement.
“This process is only beginning and subject to high uncertainties, with the global economy likely to grow at a slower pace. The situation is expected to be prolonged.”
There is still monetary policy room, but not much, to support the economy, Assistant Governor Sakkapop Panyanukul told a press conference.
“The monetary policy stance has changed. We are now in a period of easing,” he said.
“Our outlook has weakened, and there are risks. Therefore, the monetary policy stance will be more accommodative.”
There is a chance that the economy could slip into a technical recession, he added. The next rate meeting is on June 25.
A ‘technical recession’ is commonly defined as two consecutive quarters of shrinkage in economic growth.
Southeast Asia’s second-largest economy has lagged regional peers for years, growing just 2.5 percent last year.
