VIEW: JP Morgan Revises Down 2024 Inflation Expectations

February Thai inflation saw some improvement to -0.8% y/y from -1.1%, in line with expectations. Core eased to 0.4% y/y from 0.5% though. As a result, JP Morgan has revised down its inflation forecasts for this year to 0.5% for headline (previously 0.7%) and 0.8% for core (previously 0.9%). It continues to expect 50bp or rate cuts in H2 2024 driven by soft growth and inflation. This may also impact the Bank of Thailand’s 2.5% estimate of neutral.

• “Core-core inflation (excluding energy and F&B components), remained soft, reflecting the lack of demand-pull pressures and pricing power among businesses.”
• “Energy CPI rose (2.6%m/m, sa; -3.3%oya) due to the pass-through of higher global crude oil prices to unsubsidized transport fuel prices. The diesel price cap (THB29 per liter) continues to soften the pass-though, although interestingly, it was supported by lower marketing margins last month instead of deeper Oil Fund subsidies as excise taxes were reinstated.
• “Despite the recent increase in agricultural PPI, raw food and prepared food CPI pressures remain muted, likely due to the lack of broad-based cost increase per the 2022 episode and ongoing price controls.”