TPSO predicts 2026 inflation at 0.0–1.0% after 2025 falls 0.14%

December inflation dips as energy costs fall

The Trade Policy and Strategy Office (TPSO) announced on Wednesday that headline inflation in December fell by 0.28%, bringing inflation for 2025 down by 0.14%, while forecasting inflation in 2026 at between 0.0% and 1.0%.

TPSO director-general Nantapong Chiralerspong told a press conference that inflation in December eased at a slower pace due to falling energy prices, including oil prices and electricity tariffs, in line with global energy trends.

He also attributed the drop in energy prices and headline inflation to a decision by the Oil Fuel Fund Executive Committee to reduce contributions to the Oil Fuel Fund for diesel.

Moreover, Nantapong said prices of personal care items continued to fall due to promotional campaigns by manufacturers and major retailers.

However, he said prices in the food and non-alcoholic beverages category rose, led by higher prices for fresh vegetables, non-alcoholic drinks and ready-to-eat meals. Core inflation, which excludes fresh food and energy, increased by 0.59%.

What drove headline inflation in December

According to Nantapong, headline inflation fell by 0.28% mainly because prices in categories other than food and beverages dropped by 1.43%, reflecting declines in key items—especially energy products (electricity tariffs, gasohol, diesel and petrol)—as well as personal care items (shampoo, skincare products, facial cleanser and body soap), cars, water supply charges, cleaning-related products (laundry detergent, fabric softener, starch, floor cleaner) and clothing (men’s, women’s and children’s T-shirts, men’s and women’s shirts, and men’s long trousers).

Meanwhile, several key items recorded price increases, including house rents, overseas and domestic tour packages, BTS Skytrain fares, men’s and women’s haircuts, refuse collection fees and pet food.

Food and drink prices rise, led by vegetables and ready meals

The food and non-alcoholic beverages category rose by 1.53%, driven by higher prices for key items such as fresh vegetables (fresh chillies, morning glory, Chinese cabbage, cabbage, yardlong beans and holy basil), ready-to-eat meals (prepared dishes, rice with curry, noodles and rice topped with stir-fried basil), non-alcoholic beverages (instant coffee, hot/iced coffee and chocolate-flavoured drinks), fish and seafood (short mackerel, tilapia, snakehead fish, banana squid and steamed tuna) and sugar products (desserts and ice cream), Nantapong added.

However, he said prices for many items fell, including fresh fruit (tangerines, mangoes, Namwa bananas, grapes, watermelon and bananas), glutinous rice, jasmine rice, eggs, cooking oil and oyster sauce.

2025 inflation turns negative for the first time in five years

For 2025 as a whole, average inflation fell by 0.14%, mainly due to lower energy prices—fuel and electricity tariffs—following global energy price trends and government measures to ease the cost of living.

At the same time, prices of fresh vegetables and fruit declined as more produce reached the market, while prices of personal care items dropped due to sales promotions by businesses. Still, prices rose in some key categories, including ready-to-eat food, fish and seafood, and cooking ingredients, the TPSO director-general said.

“December marked the ninth consecutive month of negative inflation, while annual inflation at minus 0.14% was the first contraction in five years, since 2021,” Nantapong said.

2026 inflation forecast and risks to watch

Nantapong said headline inflation in 2026 is expected to be within 0.0% to 1.0%, with a midpoint of 0.5%. By quarter, inflation is projected at minus 0.25% in the first quarter, rising to 0.46% in the second, 0.99% in the third and 1.23% in the fourth.

Supportive factors include agricultural product prices that are likely to rise under policies aimed at stabilising farm-gate prices, as well as a recovery in tourism, which is expected to push up prices of related goods and services.

However, he said several challenges will need close monitoring, including global crude oil prices that remain below last year’s levels; the baht’s continued appreciation, which has been faster than in other countries in the region; subdued growth in Thailand and the global economy; and uncertainty stemming from geopolitical conflicts on multiple fronts. He also flagged risks from climate change-driven natural disasters, which could cause widespread income losses and have a significant impact on inflation.

Q1 2026 outlook: inflation likely to stay negative

For the first quarter of 2026, Thailand’s headline inflation is expected to remain in negative territory, between minus 0.5% and 0.0%, with a midpoint of minus 0.25%.

Key factors include the low oil price base compared with the same period last year, along with weak economic demand due to the absence of stimulus measures during the election period. However, some items are expected to rise, particularly fresh vegetables, as output has been damaged by natural disasters.

The situation is expected to improve later on, supported by post-election government stimulus measures, a tourism recovery and faster disbursement of government spending.