ASEAN KEY DESTINATIONS
Thai April CPI eases for fourth month
THAILAND’S annual consumer price index in April fell for a fourth straight month and will likely ease further, but the authorities say there is little risk of deflation yet.
Falling inflation gave the Bank of Thailand room to cut interest rates this week, surprising markets that had expected no change after it already cut rates at its previous meeting.
The Commerce Ministry said on Friday that the consumer price index may drop again in May before turning positive, due to base effects, as oil prices started to decline after May 2014.
The index, published by the ministry, fell more than expected, down 1.04 per cent in April from a year earlier, compared with a decline of 0.80 per cent forecast in a Reuters poll.
“The main reason for negative inflation is oil prices but there is no deflation yet as core inflation is likely to go higher,” Somkiat Triratpan, the ministry’s director general of Trade Policy and Strategy Office, told reporters. In January, consumer prices fell on a yearly basis for the first time since September 2009.
While the ministry expects annual headline consumer prices to fall 0.5-0.7 per cent in the second quarter, it sees full-year inflation at 0.6-1.3 per cent.
The core inflation rate, which strips out food and energy prices, eased to 1.02 percent in April from 1.31 per cent in March.
On Wednesday, the central bank unexpectedly cut its benchmark interest rate by 25 basis points to 1.50 per cent, the second consecutive cut, citing weak growth and the risk of prolonged negative headline inflation. A steeper fall in headline CPI suggests “the economy is still weak and needs time to adjust. The recent rate cut is to help reduce a risk of deflation,” central bank spokesman Chirathep Senivongs Na Ayudhya told reporters on Friday.
A military-led government that seized power last May has struggled to revive growth in Southeast Asia’s second-largest economy as exports and domestic demand have remained sluggish.
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