Thai inflation at fresh 14-year high boosts rate hike odds

THAILAND’S retail inflation accelerated in June to a new 14-year high, boosting the case for central bank to raise borrowing costs sooner than later.

Consumer prices rose 7.66% from a year earlier, accelerating from 7.1% a month ago, official data showed Tuesday. That’s faster than the median 7.45% gain predicted by economists in a Bloomberg survey and the highest since July 2008.

High inflation boosts case for Thailand to raise interest rates

Faster inflation adds to the case for Southeast Asia’s second-largest economy to join central banks the world over in tightening policy settings to rein in price gains. The Bank of Thailand has for now ruled out the need for any unscheduled rate action, with one more price print due next month before policymakers meet to review monetary policy on Aug. 10.

“We do not think this raises a risk of an inter-meeting as some may have speculated,” said Nomura Holdings Inc. analyst Charnon Boonnuch. “Nonetheless, we believe that a 25 basis-point hike in August is likely a done deal.”

The Thai interest rate-setting committee said late last month delaying monetary policy normalization amid heightened inflation pressures may cause “greater costs” to the nation’s economy after keeping the key rate unchanged in a 4-3 split vote. — Bloomberg

Some other key details from Tuesday’s price print:

• Consumer prices rose 0.9% month-on-month, beating estimate was for a 0.78% gain

• Core consumer prices rose 2.51% from year ago; estimate was for 2.37% increase

• Index of foods and non-alcohol beverage rose 6.42%

• Energy prices jumped 39.97%; Transport and communication costs surged 14.75% on rising fuel prices and public transport fares

• CPI in the first half was 5.61% while core inflation stood at 1.85%