June 4, 2020 / 9:21 AM / 2 months ago

UPDATE 1-Thailand's headline consumer price index marks biggest drop in nearly 11 years

(Adds central bank’s comment)

BANGKOK, June 4 (Reuters) - Thailand’s headline consumer price index (CPI) fell 3.44% in May from a year earlier, its biggest contraction in nearly 11 years and more than expected, commerce ministry data showed on Thursday.

While there is a risk of deflation if the economy does not perform as well as expected, Thailand is not currently in deflation as the inflation rate has been negative for just three months, Don Nakornthab, senior director of the central bank’s economic and policy department, said in a statement.

Deflation would entail a prolonged period of negative inflation as well as price falls in several goods and services sectors and other factors, he said.

He added that the central bank, which is monitoring the situation closely, expects negative inflation for the rest of the year before turning positive next year.

The reading compared with expectations of a 2.95% decline in a Reuters poll, and with a fall of 2.99% in April. The central bank targets headline inflation of 1%-3%.

The annual core inflation rate was 0.01%, which compares compared with a forecast of 0.35%, and April’s 0.41%.

Reporting by Kitiphong Thaichareon and Orathai Sriring; Editing by Edwina Gibbs

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