UOB Global Economics & Markets Research, led by economists Enrico Tanuwidjaja and Sathit Talaengsatya, has analyzed Thailand's July Consumer Price Index (CPI) data, which showed headline CPI easing to +1.95% year-on-year (y/y) and -0.73% month-on-month (m/m), down from +2.42% y/y and -0.34% m/m in June. This result undershot both the +2.55% Reuters consensus and the Bank of Thailand's (BoT) earlier monthly reference path [1]. Despite the lower headline figure, core CPI firmed to +1.34% y/y and +0.08% m/m, indicating continued but contained indirect cost pass-through [1].
UOB notes that inflation in Thailand remains supply-led, with upstream Producer Price Index (PPI) still elevated. The BoT's June baseline projects headline inflation at 2.8% in 2026 and 1.4% in 2027, while core inflation is expected at 1.5% and 1.4% for those years, respectively, as supply pressures and unfavorable base effects are anticipated to fade next year [1].
UOB maintains its forecasts for headline CPI at 2.8% in 2026 and 1.4% in 2027, and expects the BoT to hold its policy rate at 1.00% through the end of 2027. The principal swing factors influencing this outlook are oil prices, the Thai baht (THB), and the current account, rather than a domestic demand-led tightening cycle [1].
The research team concludes that a prolonged hold on the policy rate offers the best balance between maintaining price stability and avoiding unnecessary tightening of already fragile financial conditions [1].
CONCLUSION
Thailand's July CPI undershot expectations, reinforcing UOB's view that inflation remains supply-led and not driven by domestic demand. UOB expects the BoT to maintain its policy rate at 1.00% through end-2027, prioritizing price stability and financial condition resilience. Market participants should monitor oil, THB, and current account developments as key factors influencing future policy decisions.