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The Bank of Thailand has reiterated that an inflation rate between 1% and 3% is appropriate to support the country's economic growth potential. Speaking at the Monetary Policy Forum on Wednesday, Piti Disyatat, deputy governor for monetary stability at the central bank, said the regulator forecasts a headline inflation rate of 1.2% for 2025, within its target range and rising from an anticipated 0.
5% in 2024. Core inflation (excluding fresh food and energy) is expected to increase to 0.9% in 2025, up from 0.
5% this year, according to the central bank. Finance Minister Pichai Chunhavajira said on Tuesday after a meeting between the Finance Ministry and the central bank to set an inflation target for 2025 that the country's inflation rate needs to be around 2% to support economic growth. Thailand's headline inflation rate was 0.
2% year-on-year in the first nine months of this year, with core inflation averaging 0.48%. "If the inflation rate increases to 2%, as the government intends, this is still within the central bank's range.
The Finance Ministry and the central bank reached a consensus on this level at Tuesday's meeting," said Mr Piti, who was involved in the discussion. According to Mr Piti, the inflation target considers Thai economic growth, with the central bank expecting inflation of 1-3% aligning with growth potential of 2.8-3%.
In the longer term, Thailand's potential growth could increase with ongoing structural reforms, he said. Mr Piti said inflation is influenced by both internal and external factors, each contributing about 50%. Internally, energy and fresh food prices, which are largely uncontrollable in the short term, make up around 90% of inflation's demand-side factors.
"The low inflation level is partly related to structural elements, such as heightened competition from imported goods and government initiatives to stabilise price fluctuations, like the Oil Fuel Fund," he said. "There are no indications of deflation, as widespread and sustained price declines have not been observed." The central bank forecasts Thai GDP growth of 2.
7% for 2024 and 2.9% for 2025. Growth is expected to become more balanced, with expansions in the tourism and export sectors, according to Sakkapop Panyanukul, assistant governor for the monetary policy group at the central bank.
Foreign tourist arrivals are projected to reach 36 million this year, rising to 39.5 million in 2025. As of Oct 28, there have been 28.
3 million foreign arrivals this year. Tourism income is expected to hit 1.4 trillion baht this year, increasing to 1.
6 trillion baht next year, said Mr Sakkapop. However, notable risks remain, such as US-China trade tensions, especially following the upcoming US presidential election, and geopolitical risks, including potential escalations in the Middle East, he said..
