Thai economy not in deflationary period despite 5 months of negative inflation

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BANGKOK, 3 June 2015 – The Bank of Thailand (BOT) has insisted the Thai economy has yet to enter a deflationary period despite negative inflation for five months in a row.

Mathee Supapongse, the Bank of Thailand’s assistant governor for the Monetary Policy Group, asserted  that the five consecutive months of negative inflation did not constitute a deflationary period, as most of the fall in prices could be attributed to the decline in oil price. He expressed the belief that inflation will pick up in the latter half of this year when the prices of oil price start to increase and consumer demand picks up.

The inflation rate in May was negative 1.27%.

According to Mr. Mathee, the central bank’s Monetary Policy Committee still places emphasis on utilizing the benchmark rate as its primary tool in maintaining financial stability although it has taken into consideration the use of exchange rate measures that would drive down the value of the baht and facilitate exports. However, improvements to exporters’ competitiveness, not the exchange rate, would be the main factor attempting to revive exports, he said.