Thailand's October Inflation Accelerates Past Central Bank Target Range

what happened

Thailand's consumer prices rose 3.9% year on year in October, up from 2.82% in September, the government reported on Friday. According to Dow Jones Newswires, citing Wall Street Journal polling, the reading beat the median forecast of 3.5% from seven economists and went above the Bank of Thailand's 1%-3% target range.

Core inflation, which strips out volatile fresh food and energy, edged up to 1.58% from 1.50% a month earlier. The government said higher fuel prices, driven by unstable global energy markets amid the Middle East conflict, were the main factor behind the headline rise.

The Bank of Thailand kept its policy rate at 1.00% in October, treating the faster inflation as temporary. Its next rate-setting meeting is set for December 23.

why it matters

For markets, the key question is whether higher energy and production costs will pass through to consumer prices and inflation expectations. For now the central bank views the acceleration as temporary, which will be the main theme ahead of its December decision.

market impact

Thai baht and bonds: inflation above target raises questions about the central bank's next moves

tags

instruments