BANGKOK- Thailand’s headline inflation rate slowed in July for the first time this year, helped by government support measures, but the pace was still near a 14-year high, reinforcing a view of an interest rate hike next week.
The headline consumer price index (CPI) rose 7.61 percent in July, driven by high energy prices, commerce ministry data showed on Friday, and missed a rise of 7.8 percent forecast in a Reuters poll.
The pace, though a hair lower than June’s 7.66 percent increase, was near the highest since 2008.
Despite high energy prices, government controls on goods prices and support measures for low-income earners, as well as a base effect helped slow the rise in inflation, ministry official RonnarongPhoolpipat told a news conference.
The ministry expects headline inflation to average at 5.5 percent to 6.5 percent this year, in line with other state agencies’ predictions, he said.
The Bank of Thailand predicts headline inflation of 6.2 percent this year, well above its target range of 1 percent to 3 percent.
The BOT is expected to start raising its benchmark interest rate from a record of 0.50 percent at its next meeting on Aug. 10 to contain inflation. The rate has been left unchanged since May, 2020.
In July, the core CPI index, which strips out energy and fresh food prices, rose 2.99 percent from a year earlier, higher than a forecast 2.6 percent rise, and faster than June’s 2.51 percent.
In the January-July period, headline inflation was 5.89 percent and the core rate was 2.01 percent.
Thailand’s economy improved in June and the momentum should continue into the second half thanks to increased tourism and domestic consumption as pandemic curbs ease, a central bank official said.
While the revitalized tourism sector is a good boost to the economy, Bank of Thailand (BOT) Senior director Chayawadee Chai-Anant said officials are monitoring inflation, COVID-19 outbreaks and global economic issues.
Southeast Asia’s second-largest economy improved in the second quarter from the previous quarter, with annual growth expected at 3 percent or slightly higher, she said.
Official second-quarter gross domestic product will be released by the state planning agency on Aug. 15. In the first quarter, annual GDP growth was 2.2 percent.
