Headline inflation in Thailand eases slightly in July as rate hike looms

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BANGKOK: Thailand’s headline inflation rate slowed in July for the first time this year, helped by government support measures, but the pace was still close to a 14-year high, bolstering the prospect of a interest rate hike next week.

The headline consumer price index (CPI) rose 7.61% in July, driven by high energy prices, Commerce Department data showed on Friday, and missed a 7.8 rise. % predicted in a Reuters poll.

The pace, though a hair down from June’s 7.66% increase, was close to the highest since 2008.

Despite high energy prices, government controls on goods prices and support measures for low-income people, as well as a base effect have helped slow the rise in inflation, the official said of the Ronnarong Phoolpipat ministry during a press conference.

The ministry expects headline inflation to average between 5.5% and 6.5% this year, in line with forecasts from other state agencies, he said.

The Bank of Thailand forecasts headline inflation of 6.2% this year, well above its target range of 1% to 3%.

The BOT is expected to start raising its benchmark interest rate from a record 0.50% at its next meeting on Aug. 10 to contain inflation. The rate has remained unchanged since May 2020.

In July, the core CPI, which excludes energy and fresh food prices, rose 2.99% from a year earlier, higher than the expected rise in 2.6% and faster than June’s 2.51%.

During the January-July period, headline inflation was 5.89% and the base rate was 2.01%.

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