Thailand inflation turns negative for first time since Mar 2024

SINGAPORE (ICIS)–Thailand’s inflation turned negative for the first time since March 2024, falling 0.22% year on year in April 2025 amid lower costs for energy products and personal care products, the country’s Trade Policy and Strategy Office (TPSO) said on 6 May.

• Inflation falls 0.22% amid lower crude prices
• Economic uncertainty, US trade war weigh on GDP
• Thailand GDP projected to grow by up to 2.0% in 2025

Core inflation – excluding fuel and fresh food prices – rose 0.98% in April, while there was a 0.21% decrease in inflation month on month from March.

“The trend of the general inflation rate in May 2025 is expected to be at a level close to April 2025,” the TPSO said.

Crude oil prices are falling and gasoline prices are expected to trend downwards, contributing to a negative consumer price index (CPI).

The continuation of state subsidies would also weigh on the CPI, keeping it negative.

The Bank of Thailand (BOT) reduced its key interest rate to 1.75% from 2.00% on 30 April, citing the US tariffs and its global trade war causing uncertainty in the economy.

“The prevailing monetary policy framework seeks to maintain price stability, support sustainable growth and preserve financial stability,” the BOT said.

“The Thai economy is projected to expand at a slower pace than anticipated, with more downside risks due to uncertainty in major economies’ trade policies and a decline in the number of tourists,” it added.

Accordingly, Thailand’s GDP forecast for 2025 has been downgraded to around 1.3% in 2025 and 1.0% in 2026, if trade tensions intensify and US tariffs are set at higher rates, according to the BOT.

On the other hand, if the 10% baseline tariffs by the US remain, Thailand’s GDP growth is forecast at 2.0% in 2025 and 1.8% in 2026, the BOT said.

Further rate cuts are anticipated by Singapore-based UOB Global Economics and Market Research, possibly as early as the BOT’s next meeting in June, to support growth.

“This reflects the central bank’s continued focus on maintaining sufficient policy space and its view that the full impact of global trade tensions would become more apparent in the second half of 2025,” UOB said in a note on 30 April.

Inflation is expected to remain below the lower bound of the BOT’s target range of 1%–3%.

Focus article by Jonathan Yee