Lacklustre growth, slower inflation for Thailand

BANGKOK --  Thailand's headline inflation slowed further to 0.32% y/y in September, marking the fourth straight month it has come in below the Bank of Thailand's (BoT) target band of 1-4%. The slowdown was led by a sharper fall in energy prices, though core inflation also eased.

ANZ Bank says latest inflation and activity data continues to signal that further monetary easing cannot be ruled out.

On a sequential basis, ANZ in a research note says headline CPI edged up marginally by 0.10% m/m in September, partially reversing a 0.19% fall in August. Food prices rose by 0.12% m/m.

Among the food items, rice and cereal prices spiked most at 2.41% m/m in September, although the pace of increase was less than the 3.25% surge in the previous month. In contrast, vegetable and fruit prices saw the sharpest pace of decline at 0.94% m/m, still considerably slower than the 3.96% fall seen in August.

Non-food prices also rose, by 0.08% m/m in September following a 0.13% decline the month before. However, price pressures in most categories were muted.

Core CPI rose 0.09% m/m in September, unchanged from August. In y/y terms, it eased to 0.44%.

ANZ says activity indicators released yesterday point to a weak growth picture for the Thai economy.

Private consumption growth slowed in August, while private investment, public spending, and exports contracted in y/y terms.

With core inflation likely to stay subdued against a backdrop of lacklustre growth, a further policy rate cut would be needed to bring the real policy rate (based off core inflation) in line with its historical average, it says.

www.live.anz.com (ATI).