Thailand’s headline inflation outstripped forecasts to hit a near 14-year high in June, reinforcing expectations of an interest rate hike as early as next month, and with the Commerce Ministry warning price pressures will extend into the third quarter.
The headline consumer price index (CPI) rose 7.66% from a year ago, driven up by higher energy prices and affected by base effects, the ministry said on Tuesday.
The figure beat a forecast 7.50% rise in a Reuters poll and compared with May’s 7.10% rise.
The CPI in the current quarter is expected to rise at a similar pace as the second quarter’s 6.46%, Ronnarong Phoolpipat, director-general of Trade Policy and Strategy Office, told a news conference.
Consumer prices, however, should fall sharply in the final quarter of the year due to last year’s high comparative figures, he said.
While the pace of inflation was difficult to predict due to various factors including a weak baht, the ministry was maintaining its forecast for average headline inflation of 4.5% this year. In 2008, inflation was 5.5%.
The Bank of Thailand, however, expects headline inflation of 6.2% for this year, above its target range of 1% to 3%.
The central bank is widely expected to hike its policy rate from a record low of 0.50% at its next meeting on Aug. 10 to contain rising inflation.
The core CPI index, which strips out energy and fresh food prices, rose 2.51% from a year earlier, also beating a forecast 2.37% rise, and compared with May’s 2.28% increase.