Thai Inflation Sinks for Sixth Month, Nearing Zero—But Deflation Fears Dismissed
September CPI fell 0.72% year-on-year, primarily due to government subsidies; officials forecast Q4 inflation will be 'near zero' but stress core demand is intact
- Thailand's headline inflation rate fell for the sixth consecutive month in September, decreasing by 0.72% year-on-year.
- The drop is primarily attributed to government relief measures that lowered energy prices, including fuel and electricity tariffs, as well as reduced costs for fresh food.
- Authorities dismiss fears of deflation, pointing to the positive Core CPI (up 0.65%), which excludes volatile food and energy prices and indicates that domestic demand is still present.
- The Ministry of Commerce forecasts the inflation rate will be near zero for the final quarter of 2025 and has revised its full-year projection down to approximately 0.0%.
Thailand’s annual inflation rate has continued its persistent decline, recording a drop for the sixth consecutive month in September, according to the Ministry of Commerce.
While the trend points towards an inflation rate near zero in the final quarter of 2025, authorities are firmly dismissing concerns that the country is entering a period of deflation.
The Kingdom's Headline Consumer Price Index (CPI) for September 2025 stood at 100.11, representing a 0.72% decrease year-on-year.
Nantapong Jiralertpong, Director-General of the Trade Policy and Strategy Office (TPSO), explained that the primary factors driving the reduction were significant cuts to energy prices—specifically lower fuel costs and reduced electricity tariffs—implemented as part of government relief measures.
Price reductions in fresh food items, including eggs, vegetables, and fruit, compared with the previous year, also contributed to the fall.
Despite the sustained drop in the headline figure, Nantapong stressed that Thailand’s economy is not in deflation because Core CPI remains positive.
Core inflation, which excludes volatile energy and fresh food prices, registered a 0.65% rise year-on-year.
Although this figure softened from 0.81% in August, it indicates that domestic purchasing demand is still present.
“Many people are asking whether Thailand is now in deflation. Deflation has many components, but if we consider the overall picture, domestic demand persists, which is reflected by the fact that core inflation has not decreased, particularly in the prepared food and recreation sectors,” Nantapong said.
“Furthermore, employment remains at a normal level. Therefore, the various components do not fit the criteria for deflation, though we must monitor the situation closely,” he added.
Looking ahead, the Ministry of Commerce projects the inflation rate for the fourth quarter of 2025 will be "near zero," with a possibility of it turning negative in certain months.
This outlook is supported by global crude oil prices remaining significantly lower than the previous year and the government’s continued aid to reduce the cost of living, notably the reduction of the Ft (fuel adjustment) electricity tariff until December 2025.
Thailand’s low inflation figure stands out regionally. In August 2025, with an inflation rate of -0.79% year-on-year, Thailand ranked as the lowest among formally reporting ASEAN countries and ninth-lowest among 140 global economies.
External factors, such as the strengthening Thai Baht, are also helping to keep prices low by reducing the cost of imported energy and other goods.
The government is also continuing economic stimulus programmes, such as the Kon La Krueng (co-payment) scheme, which is expected to boost consumer confidence and spending in the short term.
Following the latest figures, the Ministry of Commerce has revised its full-year 2025 headline inflation forecast down from the previously estimated range of 0.0–1.0% to approximately 0.0%.
