Thai inflation climbs to 38-month high on energy costs and fares

Thailand’s inflation is rising as a result of the impact of the Middle East war, which began on February 28, pushing crude oil and petrochemical prices to high levels.

The Trade Policy and Strategy Office (TPSO) under the Ministry of Commerce reported that Thailand’s headline Consumer Price Index (CPI), or inflation, for April 2026 stood at 103.03. Compared with the same period in 2025, headline inflation rose 2.89%, the highest increase in 38 months since February 2023, when it rose 3.79%.

Nantapong Chiralerspong, director of TPSO, said this was due to a significant rise in domestic fuel prices caused by the conflict in the Middle East and the prolonged closure of the Strait of Hormuz, which had pushed up public transport fares and related factors as follows:

The non-food and beverage category rose 4.14%, driven by fuel products, public transport fares, house rents and cleaning-related items.

The food and non-alcoholic beverages category rose 0.98%, due to higher prices of key items including ready-to-eat food, fresh vegetables, chicken eggs, white rice, fresh chicken, non-alcoholic drinks, fish and aquatic products.

Core inflation, headline inflation excluding fresh food and energy, rose 0.83%. The average for the first four months (January-April) of 2026 increased 0.32%.

May inflation is expected to climb further

In addition, headline inflation in May 2026 is expected at 3.06%, driven by two main factors: energy costs and pass-through costs, which are becoming harder to absorb and are being passed on to end consumers through transport costs and raw material costs.

Factors supporting higher headline inflation include higher domestic retail oil prices in line with global crude prices, which have remained elevated because of geopolitical tensions in the Middle East, as well as the continuing prolonged closure of the Strait of Hormuz.

Ready-to-eat food prices have also risen as operators pass costs on to selling prices after facing pressure from higher costs on several fronts. Meat prices, including pork and chicken, have also increased because of higher animal feed and transport costs.

Major producers signal price increases

Travel expenses have also increased, especially bus fares and airfares on domestic and international routes, as fuel prices remain persistently high and operators face cost pressures. Major operators have begun signalling price adjustments for consumer goods to reflect higher raw material and transport costs.

Factors weighing on headline inflation include government measures to reduce living costs, such as the Thai Helps Thai project. Electricity charges in May 2026 fell compared with 2025, even though the Ft charge was raised for the May-August 2026 round. In June 2026, there will be a measure to help electricity users through a restructuring of electricity tariffs, with the rate for the first 200 units capped at no more than THB3 per unit.

TPSO has forecast inflation under two scenarios:

Inflation in 2026 is expected to be 1.5-2.5%, based on assumptions that GDP expands 1.5-2.5% and oil prices rise for two months, with average oil prices in months four and five at US$120 per barrel before falling to US$70 per barrel. The average diesel price for the year is THB33.90, and the average electricity tariff is THB3.90 per unit.

Inflation in 2026 is expected to be 2.5-3.5%, under the assumption of high oil prices for three months. Dubai crude oil prices in months four and five are expected to be US$120 per barrel before moving to US$80 per barrel. The average diesel price for the year is THB35.78 per litre, while the electricity tariff is THB3.93 per unit.

Single-dish meal prices may jump

Another important factor driving inflation in both scenarios is food prices, especially “single-dish meals”, which are likely to rise in line with energy costs. If energy costs stay high, prices would rise by an average of 3% in the first scenario and could reach 6% in the second, with a broad impact nationwide.

In the first quarter, inflation stood at -0.54% because the impact of oil prices had not yet been fully passed through. In the second quarter, inflation was 3.67%, with signs of an increase starting to emerge. In the third quarter, the situation is expected to stabilise if there are no additional conflict factors, with inflation likely at 2.24%. Inflation in the fourth quarter is expected at 2.48%, while the Commerce Ministry forecasts headline inflation for 2026 at 1.5-2.5%, with a midpoint of 2.0%.

Short-term inflation acceleration a concern

Amonthep Chawla, Executive Vice President and head of the Research Office at CIMB Thai Bank (CIMBT), said April 2026 inflation was much higher than expected and abnormal enough to require month-by-month monitoring for a clearer assessment. Inflation in March 2026 expanded by only 0.6%, but the latest figure was 2.8%, reflecting a significant short-term acceleration and representing a worrying signal for the inflation outlook ahead.

“Price pressures are accelerating quite sharply. In May or in the period ahead, inflation could continue to rise as a result of the inflation basket structure, which has a high share of transport and food. When energy costs rise, the effect is increasingly passed through to many products.”

Therefore, the rise in headline inflation must be monitored to see how much it affects core inflation, as this indicator excludes the impact of fresh food and energy and better reflects real price pressures in the economy.

Prices of other goods may rise in line with costs in the period ahead, especially consumer products such as soap, shampoo, clothing and shoes, as well as service sectors that rely on transport and energy costs.

He was also concerned about rising costs even when prices do not increase, a phenomenon known as “shrinkflation”, where products remain at the same price but contain smaller quantities. This is another form of business adjustment under rising cost conditions. Consumers may not see a direct price increase but receive less product.

Inflation may rise quickly in the second quarter

The inflation outlook ahead has a high chance of moving above 3%. This had previously been expected in the third or fourth quarter, but could now be seen in the second quarter, in line with the Bank of Thailand’s (BOT) view that inflation may at times exceed the upper end of the target range.

Although inflation is likely to accelerate, it is a temporary factor because the main cause is higher energy prices, an external and volatile factor that does not reflect structural price pressure in the economy.

Therefore, the temporary increase in inflation does not yet require an immediate adjustment in monetary policy to control inflation expectations, because this round of inflation can still be explained mainly by cost-side factors and has not spread into broad demand-side pressure.

The issue of concern and requiring close monitoring is fiscal stimulus measures, especially large-scale borrowing plans that could change existing assumptions about the direction of inflation. Some measures could accelerate demand-side stimulus, or demand-pull inflation. In this case, inflation analysis will need to take new factors into account and study the impact on prices of goods and services in greater detail.

“If economic stimulus measures are large enough, it is possible that prices of goods and services will start to rise. On one side, this would benefit businesses by allowing them to better reflect costs, but on the other, it could add to consumers’ cost-of-living burden.”

Inflation may touch 4-5% at times this year

Burin Adulwattana, managing director and Chief Economist of Kasikorn Research Centre, said March 2026 inflation was lower than normal because prices had been partially supported. Once that pressure eased, inflation rose sharply, reaching its highest level in 38 months, a concern, even though it was not as high as during the Ukraine-Russia war, when inflation reached 5-6%.

“In the next two to three months, inflation is likely to continue rising from cost pressures, especially energy prices and commodities. But when considering the average for the first three to four months, it remains close to zero or negative, so the full-year average will be 3.4%, compared with the previous view of close to 0%.”

Key factors that could push inflation higher come from price increases across several categories, including oil, food and production inputs such as fertiliser, all of which are major costs passed through to consumer prices.

Rising inflation is causing concern, especially over higher living costs. However, from an economic perspective, it is not considered to be at a crisis level when compared with several countries that have faced levels of 6-7% or more.