Thailand inflation to inch up to 3.4% in 2H12

Bounty rice supply, government measures and wage hikes are expected to cap inflation.

In a release by CIMB, Thailand’s inflation kept within a tight range of 2.4-2.6% yoy for the third straight month in June while food price inflation eased significantly from over 10% in Nov last year to below 5% in Jun amid higher food supplies.

Here's more from CIMB:

We anticipate inflation remaining quite stable at 3.4% in 2H12 (vs. 3.0% in 1H12), bringing full-year inflation to 3.2%.We believe Thailand’s inflation will be capped by 1) a surge in hefty stockpiles of rice ahead of new crop harvests, 2) government measures to curb inflation pressures, e.g. extension of the diesel tax waiver, four-month retail price freeze, prices of NGV and LPG on hold until mid-Aug and controls on retail prices of cooked foods, and 3) the manageable impact of the minimum wage hike as workers are not spending the additional income because of worries over job stability and higher living costs. Contrary to the official forecast, we think that inflation may stay on the slow burner when the domestic economy fully recovers by 3Q12.