Macroeconomics/Inflation in 2023

Editorial team

Headline inflation is forecasted at 2-3% this year

The ministry of commerce expected the headline inflation to range between 2-3 % in 2023 which is in line with the current economic situation.

Mr. Poonpong Naiyanapakorn, director-general of Trade Policy and Strategy Office (TPSO) said that the commerce ministry expected the headline inflation to range between 2- 3 % in 2023 which is in line with the current economic situation and would be revised if there are any significant changes.

He said the inflation in 2023 tends to significantly decelerate from 2022 as most prices are stable and start to drop from their gradual increase following high costs in the previous year. While energy prices, especially crude oil tend to decelerate following lower demand and global economic situation.

Mr. Poonpong Naiyanapakorn, director-general of Trade Policy and Strategy Office (TPSO)

Additionally, the high-price base of 2022, the government’s measures on lowering costs of living and price control would limit an expansion of inflation. While the adjustment of electricity bills and minimum wages, fluctuated Thai Baht, growing domestic demand, the government’s
stimulus measures were factors that increase inflation. However, fluctuated commodity prices
resulting from geopolitical conflicts, climate change, COVID-19, and animal diseases were risk factors for inflation that should be closely monitored.

The overall consumer confidence index (CCI) in December 2022 improved to 50.4 compared with 49.9 in the previous month, the highest level and above the confidence level for the first time in 43 months (since May 2019) before the COVID-19 pandemic.

Both current and future CCIs
improved following Thailand’s economic recovery supported by tourism, exports, better prices of agricultural products, and the government’s measures that enhance purchasing power for households, and income for businesses, and a fall in energy prices when compared with the previous month led to higher confidence to the Thai economy.

Consumer price index (CPI) in December 2022 was at 107.86 and101.86 in December 2021.

The headline inflation in December 2022 rose by 5.89 % (YoY), following high prices of energy and food. Also, contributions were a low-price base of December 2021 and an improvement in domestic demand. When compared with the previous month, the CPI dropped by 0.06 %(MoM), decelerated for 2 consecutive months following a fall in fuel prices, pork, fresh chicken, eggs, and fresh fruits.

The annual average of CPI rose by 6.08 % (AoA) which was close to the projection.

The current inflation was contributed by a 3.87 % growth (YoY) of non-food and
alcoholic beverages following energy prices which increased by 14.62 %.

Another contribution was an 8.87 % growth (YoY) of food and non-alcoholic beverages, especially prepared food with a 9.66 % growth.

The core inflation rose by 3.23 % (YoY) which slightly increased from a 3.22 % growth in the previous month as production costs were still high.

The CPI dropped by 0.06 percent (MoM)which decelerated for 2 consecutive months.

For the annual average, the CPI rose by 6.08 % (AoA) which was close to the projection (between 5.5 – 6.5 %, with a 6.0 % mid-range.