Thailand’s consumer prices fell for a sixth consecutive month in September, keeping inflation in negative territory and increasing pressure on the Bank of Thailand (BoT) to lower borrowing costs again this week.
The sustained price contraction, driven largely by government subsidies and weak domestic demand, has raised concerns over stagnating growth rather than deflation.
The latest Commerce Ministry data showed the consumer price index (CPI) dropped 0.72% year-on-year in September, compared with economists’ median forecast of a 0.6% decline. On a monthly basis, prices fell 0.03%.
The figures highlight how subdued domestic spending and state energy subsidies continue to weigh on inflation, providing room for monetary easing.
Price declines widen amid state energy support
Thailand’s annual inflation rate has remained below zero since April, largely because of lower fuel and food prices and the government’s continued support for energy costs. Officials maintain that the trend is not deflationary, citing positive core inflation levels.
According to the Commerce Ministry, when excluding volatile items such as food and energy, core inflation rose 0.65% in September, although this increase was weaker than analysts had expected.
The Ministry of Commerce’s Trade Policy and Strategy Office said the fall in prices reflects slower economic momentum rather than deflation.
The office, led by director-general Nantapong Chiralerspong, noted that Thailand’s economy is “facing a slowdown,” prompting the government to maintain targeted subsidies and cost-of-living assistance.
Monetary easing expected under new central bank governor
The persistence of weak inflation gives the BoT scope to reduce rates again at its meeting on Wednesday — the first to be chaired by Governor Vitai Ratanakorn, who began his term last week.
Before taking office, Vitai had called for a “more accommodative” stance to stimulate domestic spending and business confidence. A majority of economists surveyed by Bloomberg expect the central bank to cut its benchmark interest rate by 25 basis points to 1.25%.
A rate cut would mark the second consecutive easing by the BoT, which has been under increasing pressure to revive growth after a sluggish first half of the year.
Economists forecast that Thailand’s economic expansion may slow to near zero in the second half of 2025 as exports weaken and household debt remains high.
Inflation forecast revised to 0% for 2025
The Commerce Ministry revised its full-year inflation forecast to 0%, down from the previous 0%–1% range. The change reflects lower-than-expected inflation in the past three quarters, weak growth, and the government’s ongoing support measures.
The administration of Prime Minister Anutin Charnvirakul plans to launch a new stimulus programme later this year to encourage consumer spending.
The government expects the initiative to deliver a short-term lift in demand without creating sustained upward pressure on prices.
Thailand’s prolonged period of negative inflation marks one of the longest streaks of subdued price growth in the region.
While the BoT maintains that underlying inflation remains stable, the continued weakness in consumer prices signals broader challenges for Southeast Asia’s second-largest economy.
Economic risks mount despite short-term relief measures
The combination of falling prices, sluggish consumption, and muted investment underscores the fragility of Thailand’s post-pandemic recovery. Economists believe that fiscal and monetary coordination will be critical in preventing stagnation from taking deeper root.
With inflation below target and growth slowing, the focus now turns to how aggressively the central bank will act under its new leadership.
The BoT’s decision this week could define the direction of monetary policy for the remainder of the year and shape market expectations heading into 2026.
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