Thailand's 2013 inflation to hit 3.7%

Sharp cuts trending upwards also loom.

According to DBS, inflation is unlikely to stay low for long even as headline CPI dipped to 2.7% YoY, driven by a sequential decline in fresh food prices.

Here's more from DBS:

For the most part of 2012, inflation has not been a problem despite elevated food prices and hikes in minimum wages in the early part of this year. Part of this can be attributed to the price controls that the authorities have put in place.

Sharp cuts in the Inflation is likely to trend higher in 2013. The rollout of higher minimum wages across the remaining 70 provinces in 2013 is likely to add to price pressures as consumption gets a boost.

On the supply side, firms will have to deal with higher costs and a lot will depend on upcoming government measures to help reduce the impact. With further inflation upside stemming from government spending on infrastructure, we expect inflation to average 3.7% in 2013.