VIEW: JP Morgan Sees Inflation Manageable & BoT On Hold In 2024

Energy prices weighed on Thai CPI in November with the headline falling 0.4% y/y. Given oil prices are down around 10% so far in December that trend may continue. JP Morgan notes though that core and food made positive contributions. It expects inflation to “remain manageable” and the Bank of Thailand to hold rates at 2.5% through 2024 “with a slight easing bias, especially if the digital wallet scheme does not get implemented”.

• “Price dynamics were mixed, with the drag from the energy component (-0.3%pt. contribution to headline monthly change; Figure 2) being completely offset by raw food (0.19%pt.) and core (0.11%pt.).”
• “The Energy Regulatory Commission’s (ERC) recent proposal to raise the electricity tariff (from THB3.99 to THB4.68 per unit) in the January-April 2024 period to reimburse EGAT adds upside risk (around 1%pt.) to headline inflation in 2024, but we believe the likelihood of implementation is low given the government’s preference for stable energy prices.”
• “Overall, agricultural PPI is picking up, but not at an alarming clip as El Niño-related disruptions have been muted. Once again, the core-core inflation (excludes all food and energy) indicator, our proxy for demand-pull pressures, continues to stay soft.”