(May 6): Higher oil prices linked to the Iran conflict pushed Thailand’s inflation to near the top end of the central bank’s target, ending a yearlong stretch of falling prices.
The consumer price index rose 2.89% in April from a year earlier, marking the first increase in more than a year, Commerce Ministry data showed Wednesday. The reading was above the 2.2% median estimate in a Bloomberg survey of economists.
The rebound represents the fastest pace of inflation since February 2023 and the first time since February last year that prices have returned to the Bank of Thailand’s 1%-3% target range. The gauge may climb further to 3.06% this month and 3.27% in June before peaking at around 4.1% in October, officials said at a briefing.
The yield on the 10-year government bond rose one basis point to 2.24% while the baht was steady, holding onto its 0.6% gain against the dollar.
On a monthly basis, the index rose 2.75% in April, accelerating from 0.6% in March. Core inflation edged up 0.83%, from 0.57% a month earlier.
See also: Oil holds decline as US says offensive phase of Iran war is over
The rapid acceleration of the headline rate highlights Thailand’s vulnerability to energy shocks. More than half of its oil imports come from the Middle East, much of it shipped through the Strait of Hormuz, leaving inflation highly sensitive to geopolitical disruptions.
The price surge in April was driven by rising costs of fuel, public transportation, airfares, rent, cleaning products, prepared food, rice and fresh vegetables, the ministry said in a statement.
“Cost pressures among producers have intensified,” the ministry said. “Major operators have indicated signs of price adjustments on consumer goods to reflect higher raw material and transportation costs.”
See also: Oil holds gain as Iran, US exchange fire in Middle East flare-up
Bank of Thailand Governor Vitai Ratanakorn and his policymakers have signalled that the pickup in inflation is unlikely to prompt an immediate policy response. Officials have stressed that the current rise in prices is largely supply-driven, limiting the effectiveness of monetary tightening.
The central bank last week kept its benchmark interest rate at a near four-year low, saying inflation is expected to ease next year and that policymakers will “look through” any temporary breach of the target range.
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