Commerce lifts 2026 inflation forecast as energy prices start to bite

Thailand’s Commerce Ministry has raised its 2026 inflation forecast to 1.5-2.5%, with a midpoint of 2%, after consumer prices in March fell for a 12th consecutive month but showed signs of a slower decline as energy risks begin feeding into the outlook.

Nantapong Jiralertpong, director of the Trade Policy and Strategy Office (TPSO), said headline inflation in March 2026 slipped 0.08% year on year, extending the negative run to a full year. However, he said the pace of decline had eased, even as conflict in the Middle East and attempts to shut the Strait of Hormuz disrupted oil and key goods transport, driving global crude prices higher.

He said domestic retail fuel prices were still partly shielded in March by government price-control measures during the first half of the month, while lower electricity charges continued to ease living costs. Most goods sold during the period also remained older inventory, meaning the impact of higher energy costs had yet to fully pass through to retail prices.

Food and non-alcoholic beverage prices, however, continued to edge higher, led by non-alcoholic drinks and prepared food, while other goods and services had only a limited effect on overall inflation.

March’s headline inflation reading of minus 0.08% was driven mainly by a 0.34% decline in the non-food and beverage category, reflecting lower prices for several key items, particularly in the energy group such as electricity and fuel.

Other items that fell included personal care products, clothing, electrical repair charges and hotel room rates. At the same time, prices rose in some categories, including cars, house rents, international air fares, overseas tour packages, electric rail fares and waste collection services.

Meanwhile, the food and non-alcoholic beverages category rose 0.34%, led by higher prices for:

• prepared food, including ready-made dishes, curry rice and noodles
• non-alcoholic drinks, such as hot and iced coffee, instant coffee and chocolate drinks
• fish and seafood, including short mackerel and snakehead fish
• white rice
• fresh vegetables, including limes, spring onions, coriander, green papaya, Chinese cabbage, fresh chillies and aubergines
• sugar-related products such as desserts and ice cream

However, prices fell for several other items, including pork, vegetable oil, glutinous rice, fresh fruit such as durian, watermelon, young coconut, mango and bananas, as well as oyster sauce.

Core inflation, which excludes fresh food and energy, stood at 0.57%, while the average rate for the first quarter of 2026 was minus 0.54%.

Inflation expected to turn positive in April

Nanthapong said inflation is expected to return to positive territory in April. The ministry has prepared two quarterly outlook scenarios for 2026:

Scenario 1

• Q1: -0.54%
• Q2: +3.67%
• Q3: +2.24%
• Q4: +2.48%

Scenario 2

• Q1: -0.54%
• Q2: +5.78%
• Q3: +3.85%
• Q4: +4.15%

Based on the changing outlook, the Commerce Ministry has revised its full-year headline inflation forecast from 0.0-1.0%, with a midpoint of 0.5%, to 1.5-2.5%, with a midpoint of 2.0%.

Energy seen as the main second-quarter driver

The ministry expects headline inflation in the second quarter of 2026 to turn positive in a meaningful way, supported by several factors:

• domestic retail fuel prices rising more in line with market mechanisms as global crude prices climb amid regional geopolitical tensions
• higher prices for some agricultural goods, especially fresh vegetables and eggs, as extreme heat affects output in some periods
• rising pork and chicken prices due to higher feed and transport costs
• a significant increase in air fares, both domestic and international, driven by more expensive jet fuel and incomplete recovery in international flight capacity
• growing cost pressure on producers, with major businesses beginning to signal price increases for consumer goods to reflect higher raw material and logistics costs

Some state measures still helping to contain prices

At the same time, the ministry said several factors could continue to limit inflationary pressure:

• ongoing government support measures to reduce living costs, especially lower electricity charges
• a still-gradual recovery in prices of key fresh fruits in the domestic market

The latest figures suggest Thailand’s long stretch of deflation is beginning to lose momentum, with the government now bracing for a clearer rise in living costs from the second quarter onward as the global energy shock feeds more directly into the domestic economy.