Thailand’s inflation turns negative amid falling energy prices, raising deflation concerns

As the second quarter begins, Thailand has reported a negative inflation rate for the first time in over a year. According to the Ministry of Commerce’s Trade Policy and Strategy Office (TPSO), April's inflation decreased by 0.22%, driven primarily by falling energy prices, including gasoline, benzene, and electricity rates. Prices of fresh vegetables and chicken eggs also declined, contributing to the overall drop.

Core inflation, which excludes fresh food and energy, rose by 0.98% in April. For the first four months of 2025 (January–April), core inflation increased by 0.91%.

Comparing April 2025 to April 2024, 270 essential goods and services saw price increases—such as pork, tilapia, bananas, instant coffee, vegetable oil, sweets, house rents, and diesel. Meanwhile, 145 items experienced price drops, including eggs, limes, long beans, coriander, cucumbers, chili, tangerines, laundry products, soap, shampoo, electricity, and gasohol. Prices of 49 items remained unchanged, such as tap water, boat and train fares, and first-class air-conditioned bus fares.

As of March 2025, Thailand's general inflation rate rose by only 0.84%, ranking it 24th lowest among 134 economies and 2nd lowest among the 8 ASEAN countries that report inflation data.

Looking ahead, TPSO expects the inflation rate in May 2025 to remain similar to April’s or decrease further, marking the second consecutive month of decline. A key factor is the continued drop in global Dubai crude oil prices, which significantly influences Thailand’s inflation basket—energy accounts for 12.18% of it.

The consistent decline in inflation since January—1.32% in January, 1.08% in February, 0.84% in March, and -0.22% in April—suggests that the annual rate could fall below the government's target range of 0.3–1.3% (with a midpoint of 0.8%). First-quarter inflation averaged 1.08%, slightly below the earlier forecast of 1.13%. TPSO now predicts that second-quarter inflation will drop by 0.1–0.2 percentage points, bringing it down to between 0.14% and 0.15%, largely due to lower fuel prices.

These developments have sparked concerns over potential deflation. However, TPSO Director Poonpong Naiyanapakorn believes that Thailand is unlikely to enter a deflationary period, expecting inflation to remain above zero for the rest of the year.

This year, the inflation basket was updated to better reflect current consumption trends. The number of tracked items increased from 430 in 2019 to 464 in 2025. Items removed include newspaper and magazine subscriptions, while additions include salmon, avocados, fermented fish sauce, electrolyte drinks, salad vegetables, smartwatches, electric chargers, dashboard cameras, and automotive window film. Air purifiers may be included in future revisions.

Looking forward, energy prices remain a crucial indicator to monitor. The government’s new cost-of-living measures—particularly a 17-satang reduction in electricity rates to 3.99 baht per unit, effective from May through the end of the year—are expected to further ease inflationary pressures. TPSO plans to revise its inflation forecast in June accordingly, said Poonpong.