The Commerce Ministry has downgraded its headline inflation outlook for this year from a range of 2-3% to 1.7-2.7%, in line with economic conditions and falling energy prices.
Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office (TPSO), said the new forecast also assumes the Thai economy will grow at a rate of 2.7-3.7% this year, down from 3-4%.
Crude oil prices are projected at US$75-85 per barrel, down from $85-95 per barrel, and the exchange rate is expected to be between 32.5-34.5 baht per US dollar, down from 36-37 per dollar.
According to Mr Wichanun, the inflation rate in the second quarter of this year is expected to continue to slow as prices for many products decline, especially fuel.
The high price base in 2022 and government measures to lower living costs were also factors for the lower inflation rate.
Moreover, decelerating exports and rising interest rates may lower purchasing power and limit expansion of inflation, he said.
Rising prices for electricity and liquified petroleum gas combined with a labour shortage are still factors for high costs, said the office.
Thailand's economic recovery, long holidays and election-related activities should benefit the economy, while growing demand affecting prices of goods and services should be monitored, according to TPSO.
Given such factors, the inflation rate in April may increase from March, but is unlikely to exceed 3%, said Mr Wichanun.
From May or June onwards, the inflation rate is not expected to exceed 2.5%, while in the second half of the year the top range should be 1.0-1.5%, part of a downward inflationary trend, he said.
"The inflation rate in the second quarter is likely to stay at around 2-2.5%, with the rate in the third and fourth quarters expected to be about 1% year-on-year," said Mr Wichanun.
The ministry reported on Wednesday headline inflation, gauged by the consumer price index, was 2.83% in March, marking a deceleration for the third consecutive month and the lowest rate in 15 months.
The main contributor to the deceleration was the easing of energy and most food prices, including eggs, dairy products, vegetables, fruit, seasoning, condiments, food at home, and food away from home.
In the first quarter of 2023, headline inflation was 3.88% year-on-year, said the ministry.
Core inflation, which excludes volatile food and energy prices, was 1.75% year-on-year in March, decelerating from 1.93% in the previous month.
For the first three months of the year, core inflation rose 2.24% from the year before.
