Thailand's Inflation likely to remain low in Q4 15

Lower energy prices continue to keep Thailand inflation in negative territory. Today showed the ninth consecutive month of negative prints, as lower energy prices continue to dominate other components in the basket. Energy CPI continues to fall at double digit rates, from -17.04% y/y in August to -15.58% in September. 

On the back of drought-like conditions due to El Niño, food inflation moved up m/m, with prices rising for protein, eggs and dairy products, but a high base kept headline food inflation at 1.31% in September, from 1.27% in August. Core inflation also remains manageable at 0.96% y/y, as domestic activity remains soft.

"With energy prices remaining low, and notwithstanding base effects, CPI inflation to remain in negative territory through 2015. 2015 inflation forecast is also revised down -0.8%, and 2016 inflation is seen at 2.0%", says Barclays. 

In its recent monetary policy report, the Bank of Thailand also lowered both its growth and inflation forecasts for 2015 and 2016, with the bank now forecasting inflation at -0.9% in 2015, and 1.2% in 2016.